Papulospora sp is a fungi often isolated from soil. In New Zealand, for instance, it was found to be present in Kiwitea soil under forest and some grassland soils. This species, which has non-sporing mycelia, are also found in decaying plants. One study showed that this species were isolated from both dead and live wood that have been submerged in brackish water for a few months. Papulospora sp is also isolated from manure, paper and even textiles.

For plants, Papulospora sp can be a serious threat. Just like crop-destroying pests such as aphids, this species can seriously damage nuts such as pistachio. It has yet to be established whether this fungus is toxic or if it causes any invasive diseases. However, it can be allergenic and may result in allergic reactions in sensitive individuals. People with weakened immune systems are most prone to suffer from allergies cause by this fungi.