The velvet worm is predatory; it spits quick-hardening slime from projections (oral papillae) near the mouth to subdue invertebrates such as crickets, spiders, and wood lice. It then uses its jaws to open the captured prey before injecting digestive saliva and sucking out the liquefied insides. The slime used for capture is made of protein, and the velvet worm consumes it while the victim's insides dissolve. The velvet worm will also squirt slime in self-defense.

Onychophorans live among leaf litter, under stones or fallen logs, inside galleries of fallen logs, inside nests of termites, or in crevices and galleries in the soil—sometimes to depths of more than one metre (about three feet). Velvet worms have a remarkable ability to squeeze themselves through narrow passages, an adaptation that permits them to find shelters of satisfactory humidity and safety. They can do this because velvet worms lack any sort of skeleton. Instead, their skin produces a thin, flexible cuticle that is highly convoluted. They avoid light and are usually well concealed from casual observation. Their sense of touch is important, and onychophorans are provided with tactile spines that are sensitive to air currents.

Velvet worms have a brain and two widely separated, non-ganglionated ventral nerve cords that unite toward the tail above the rectum—a very primitive condition. The eyes of onychophorans are similar in structure to those of some true, or segmented, worms (see annelid). The respiratory system consists of numerous, irregularly distributed pits, from which many thin tracheae, or breathing tubes, originate. The tracheae penetrate deep into the body, making oxygen available to the organs and tissues within. Onychophorans have a pair of excretory organs on each leg-bearing segment. A ciliated (i.e., with hairlike structures) funnel leads to the outside at the excretory pore. Each segmental organ eliminates water and other substances, but nitrogenous excretion, in the form of uric acid, takes place in the midgut.

The phylum Onychophora consists of only two families, Peripatidae and Peripatopsidae. In evolutionary development, onychophorans are considered to lie between annelid worms and arthropods (e.g., insects and crustaceans). Fossil onychophorans date back 520 million years to the Cambrian (Cambrian Period). Phylum Onychophora is considered similar to two other primitive groups, the tongue worms (see pentastomid) and the water bears (see tardigrade). These three still-living, though ancient, taxa make up a group of organisms called oncopods (lobopod).