Until recent decades, this species was not recognized as distinct from Glaucidium minutissimum (Least Pygmy-Owl), which now is considered to be restricted to Atlantic forests of southeastern Brazil. Described as Glaucidium hardyi by Vielliard (1989), with a type locality of "20 km SW Presidente Médici, Rondônia", Brazil. The holotype is in the Departamento de Zoologia da Universidade Estadual de Campinas, Brazil. The species is named in honor of Dr. John William "Bill" Hardy, in recognition of his important contributions to the study of Neotropical birds in general, and to sound recording in particular.
There are no comprehensive phylogenetic surveys of Glaucidium. One analysis, with a limited number of taxa and a relatively small amount of DNA sequence data, suggests that hardyi is sister to Glaucidium jardinii (Andean Pygmy-Owl) and Glaucidium bolivianum (Yungas Pygmy-Owl) (Wink et al. 2008).