Cap 0.7-1.5 cm in diameter, broadly conic, becoming convex, eventually plano-convex, the disc slightly umbonate; (in some specimens the cap may be greatly reduced or absent); margin decurved, becoming plane to raised, entire, eroded or wavy; surface dull brown, glabrous at the disc, elsewhere appressed silky-fibrillose, grey-brown, paler towards the margin, sometimes faintly zonate; context thin, less than 1.0 mm thick, grey; odor, not distinctive; taste mild.
Gills adnexed to notched, close, moderately broad, dingy greyish-tan; lamellulae up to 3-seried.
Stipe 4.0-6.0 cm long, 0.5-1.0 mm thick, more or less equal, pliant, hollow to stuffed; surface of apex dull tan-brown, pruinose, darker brown below, covered with scattered lighter colored fibrils, short side branches with swollen tips projecting from the lower two-thirds of the stipe, the stipe often well buried in the substrate.
Sexual spores 4.0-4.5 x 2.0-2.5 µm, ellipsoid, thin-walled, hilar appendage conspicuous, non-amyloid; spore print white. Asexual spores 10.0-15.5 x 3-4 µm, narrowly ellipsoid to oblong, contents granular, non-amyloid.
Solitary or in small groups growing from a grain-like sclerotium on the decayed remains of decayed mushrooms, or in duff of mixed hardwood-conifer woods; fruiting from late fall to mid-winter.
This easily overlooked small, greyish mushroom is recognized by a stipe with many short, side branches. The branches which end in swollen tips produce asexual spores, presumably a hedge to the sexual spores of the cap. In some specimens asexual reproduction predominates with the cap either greatly reduced or absent. A cousin, Collybia tuberosa, is also small and inconspicuous. Like Dendrocollybia racemosa, it grows from a sclerotium on the remains of decayed mushrooms, but can be distinguished by a whitish cap, and the lack of lateral stipe branches.