Elf owls usually choose abandoned, north-facing woodpecker cavities in saguaro cacti, sycamores, cottonwoods, and other hardwood trees, to raise their young. The female usually lays three round white eggs. The eggs are incubated for about 3 weeks before the chicks hatch. The young owlets fledge at about 10 weeks. Usually, chicks are born in mid-June or early July. By the end of July, they are almost always fledged and ready to set out on their own.
They are often found in chaparral, and are easily found during their breeding season. They live in cacti much like some birds, using the shade and climate the tree provides. Elf owls usually are not aggressive and feign death in any dangerous situation, especially when a threatening animal comes inside their Saguaro cactus.
The elf owl migrates to Arizona and New Mexico in the spring and summer. In the winter, it is found in central and southern Mexico. Migrant elf owls return north in mid-April or early May.
Elf owls feed mainly on insects and therefore occupy habitats with a ready supply of these. Agaves and ocotillos are ideal places for foraging as moths and other insects may sleep in their flowers. They are often seen chasing after flying insects, with a flight similar to a tyrant flycatcher's. They also feed on scorpions. The elf owls seem to not be bothered by the scorpion's stings.
Elf owls live 3 to 6 years; in captivity they may live up to 6–10 years.