Hooded Grebes nest in clear water volcanic lakes that have cliffs on at least one side, providing some protection from the extreme winds that blast the steppes of southern Patagonia. They form colonies of several up to a hundred pairs on dense floating aggregations of Myriophyllum elatinoides, laying two eggs between December and February but never attempting to raise more than one chick (Fjeldså and Krabbe 1990). After courtship mating takes place on the platform they built; occasionally some reverse mounting is observed (Nuechterlein and Storer 1989). Colonies usually have an elongated shape and are located on the sheltered side of the lagoon on account of the winds, which have the potential of destroying the whole colony in a single storm (Beltrán et al. 1992). Some Silvery Grebes (Podiceps occipitalis) might share the colony, and at least one hybrid between the two species has been observed (Storer 1982).
Due to the late development of the plant material over which they build their nests, the grebes nest late compared to other birds of the area. Laying may start as early as December and last until the end of February. Incubation lasts 20-21 days. Hatching is asynchronic and the second egg is abandoned. If the first attempt fails early in the season, a pair may make a second attempt at breeding. Chicks are fed very small items at first, and after two weeks the diet of the young switches to snails. If the density of these items is low a complete colony may fail and the chicks abandoned to starve (Fjeldså 1986b).