In extreme environments such as the High Arctic, climatic conditions challenge physiological tolerance of insects resulting in prolonged dormancy and extended life cycles. Therefore, the selection of suitable microhabitats for overwintering is crucial. At two field sites on Ellesmere Island, we located hibernacula (silk overwintering structures) used by the Arctic woollybear caterpillar, Gynaephora groenlandica (Wöcke) (Lepidoptera: Lymantriidae) during their 11 month dormancy. All hibernacula found were anchored to the base of rocks and were not associated with vegetation. Rocks may function to absorb solar radiation and re-radiate heat, accelerating localized snowmelt, thus allowing caterpillars to emerge as early as possible in spring to begin foraging. Temperatures experienced by G. groenlandica in hibernacula throughout the winter were well within their physiological tolerance range. During late summer aestivation, hibernaculum temperatures were similar to, but more stable than, nearby soil surface temperatures. Lower maximum daily hibernaculum temperatures during the warmest month (July) may reduce metabolic rates and provide some energy savings. Since hibernacula were not randomly distributed around rocks, this suggests that G. groenlandica key in on some feature of the hibernaculum site. The northeast orientation of hibernacula at Eastwind Lake corresponds to the leeward side of rocks. Therefore wind patterns may be important in hibernaculum site selection. Other potential cues that may guide selection of hibernacula sites remain unclear: no seasonal changes in preference for light or soil moisture were observed between active and dormant caterpillars, and thermotaxis could not be distinguished from thigmotaxis.