The dominant rock of the Caples and Greenstone Valleys and the surrounding mountains is Caples Sandstone. This was deposited on the sea floor as layers of mud and sand on top of volcanic rocks about 220-270 million years ago. The sandstone is tough, erosion resistant rock which has been tilted and now stands more or less on end.
A band of blackish serpentine, known as the Greenstone Melange, is wedged between the sandstone and crosses the lower Caples and Slip Flat area of the lower Greenstone.
The river terraces and flats are made of local glacial and river gravels and outwash.
During the Ice Ages the enormous Hollyford Glacier reached as far as Martins Bay on the west coast, and flowed over Key Summit on the main divide where it branched into the Eglinton Valley and the Greenstone Valley. The Greenstone Valley glacier split into two at the Sly Burn and reached as far as Mavora Lakes in the south and Lake Wakatipu in the east.
The forests in the Caples and Greenstone Valleys are southern beech, or Nothofagus spp. Large leaved red beech trees prefer richer soils of alluvial fans at low altitude, while the small smooth leaved mountain beech predominates at higher altitudes. Silver beech occurs throughout the valleys. In some summers the bands of different beech trees across the valley sides can be clearly seen.
The forest under storey is characterised by ferns and small shrubs and trees such as the peppery tasting horopito.
The open grassy river flats have always been clear of forest, as frequent frosts in winter stop the forest encroaching onto them. Since the flats have been farmed the original grasses and tussocks have mostly been replaced by introduced grasses, although there are still some extensive areas of tussock remaining in the mid and upper Greenstone Valley.
Prominent patches of scrubby celery pine and bog pine occur in places on the river flats. Inaka or Dracophyllum, tussocks and stunted beech trees are found on McKellar Saddle.
Insect-eating birds such as tomtits/miromiro, fantails/pīwakawaka, rifleman/tītipounamu, brown creeper/pipipi and South Island robin/kakaruai thrive in the beech forests, which are rich in invertebrate life. Kākāriki, or parakeet, the rare mōhua, or yellowhead, and kākā can be heard in the forest throughout the Greenstone Valley. Kea are sometimes seen at the upper end of the Caples track, and falcon/käreärea hunt the flats and forest edges.
Whio, or blue duck, are found in fast flowing streams and rivers in the valleys, and the noisy paradise ducks/pūtakitaki are conspicuous inhabitants of the river flats.
South Island kōkako, which are considered extinct, kiwi and native bats have been reported from the Caples and Greenstone Valleys, but there have been no recent confirmed sightings.