Pannaria squamulosa forms an (spreading) thallus up to 4 cm in diameter. The thallus consists entirely of incised, grey-blue to olivaceous (scale-like structures) up to 3 mm wide and about 150 μm thick. The upper surface has a well-developed cortex (a tissue composed of cells arranged in a jigsaw puzzle-like pattern). These squamules rest upon a well-developed, crustaceous, blackish (the initial growth of the lichen), which creates a distinctive contrast with the grey-blue squamules.
Apothecia (fruiting bodies) are common, particularly in the central parts of the thallus, and can reach up to 1.5 mm in diameter. They have a flat, brown and a squamulose, grey-brown up to 150 μm thick. The
hymenium (fertile tissue layer) is about 100 μm high and
stains blue with iodine in the vicinity of the asci, which lack internal
amyloid structures. The asci contain eight spores each, and the are colourless, , subglobose (almost spherical), measuring 10–15 by 8–10 μm, with a smooth surface. All chemical
spot tests (PD, K, C) are negative, and no
secondary metabolites (
lichen substances) are detected by
thin-layer chromatography. ==Habitat and distribution==