Another similar species is "M. inclinata", which can be distinguished by gills bearing reddish spots, which may become entirely red with age. It also has whitish, slender, threadlike flecks on the stalk. "M. parabolica" is thinner, and more fragile. Another "Mycena" that grows in clusters on decaying hardwoods is "M. haematopus", but this species has a vinaceous-brown cap with a scalloped margin, and a stem that bleeds reddish-brown juice when injured. "M. excisa" closely resembles "M. galericulata", but can be distinguished microscopically by the presence of both smooth and roughened cystidia (bearing finger-like projections). "Mycena galericulata" is saprobic, and grows on decaying hardwood and softwood sticks, chips, logs, and stumps. It can also grow from submerged wood, which may give it a terrestrial appearance. It typically grows in small clusters or sometimes singly. The fungus fruits from late spring to early winter. A study of litter-decomposing fungi in a coniferous forest in Finland showed that "M. galericulata" produces extracellular hydrolytic enzymes in the humus and eluvial soil, including β-glucosidase, β-xylosidase, α-glucosidase, butyrate esterase and sulphatase. The enzymes form complexes with inorganic and organic particles in the soil and break down (depolymerize) biopolymers such as cellulose, hemicellulose, and starch, which contributes to the cycling of carbon and nutrients. The presence of lead contamination in the soil decreases both the growth and the extracellular hydrolytic enzyme activity of "M. galericulata". "Mycena galericulata" is a very common and widely distributed species, found throughout the entire temperate zone of the Northern Hemisphere. In the United States, it occurs throughout eastern North America and also along the Pacific Coast. It has also been collected in Edo State, Nigeria. Although the mushroom has occasionally been reported from Australia, these collections are probably based on misidentifications, and "Australian records of "Mycena galericulata" are best regarded as erroneous".