The genus is known only from the single specimen in amber. The mushroom was partly decomposed. Its cap is 2.2 millimetres (0.087 in) in diameter and has a convex shape.
The flesh is a bluish-gray color, hairy, and radially furrowed with sixteen grooves visible on the intact section of cap. The margin is curved slightly inward. The lamellae, or gills, though slightly decomposed, are subdivided into short sections ranging from 85 μm to 110 μm in length.
Palaeoagaracites presents the oldest, and only, evidence of fungal parasitism by other fungi in the fossil record. The fossil displays a complex interrelationship between three different fungal genera. The preserved P. antiquus cap is host to both a mycoparasitic fungus and a hypermycoparasitic fungus.
The surface of the Palaeoagaracites specimen hosts the extinct necrotroph fungus Mycetophagites atrebora. The mycelia of Mycetophagites are found across the surface of the P. antiquus pileus, and the hyphae penetrate into the P. antiquus tissues themselves forming necrotic areas.
Mycetophagites is in turn host to a hypermycoparasitic necrotrophic fungus species Entropezites patricii. Hyphae of Entropezites are preserved penetrating the Mycetophagites hyphae, forming areas of decomposing tissue. Entropezites also displays a range of growth stages for probable zygospores.