The larvae of Lype phaeopa (Stephens, 1836) are found on dead wood substrates in streams and lakes. Gut content analyses, scanning electron microscopy of larval mouthparts, and gallery structure revealed characteristics of this habitat preference. The guts of the larvae contained mainly wood fragments whereas other food items (detritus, algae, fungi, inorganic particles) were much rarer. The suitability of the mouthparts to scrape wood surfaces, and the adaptative elongation of the silk-secreting spinneret, which facilitates the construction of retreats consisting of a tunnel-like silken net incorporating mainly wood fragments, are discussed. Retreat-construction under laboratory conditions indicated that larvae exploit new feeding areas by steadily extending their galleries. Tips of the maxillary palps bear five sensilla styloconica and five sensilla basiconica, almost all bearing an apical pore. Three sensilla styloconica, two with an apical peg, and two small inconspicious sensilla basiconica are located on the galea. Possible function of these sensilla is discussed on the basis of studies on the closely related sister-group of Lepidoptera.