The fruit bodies of Cortinarius argyrionus are found in the ground under leaf litter in low-lying hills and plains near Mount Duval. They occur in June and July and grow in large clusters, sometimes with the fruit bodies clumped together. Nearby vegetation associated with the fungus typically includes Acacia filicifolia, Eucalyptus nova-anglica, E. stellulata, E. viminalis, Hakea microcarpa, H. salicifolia and Leptospermum flavescens.