With a patchy occurrence within a moderately-sized range, this species has a small population size that is inferred to be declining. Previous very rapid rates of habitat loss have slowed dramatically, but many remaining forest patches are now small and continue to be degraded. The population is considered to now be divided into several subpopulations but, as the largest exceeds 1,000 mature individuals, the species does not meet thresholds for listing as threatened and is assessed as Near Threatened. Securing the future of remaining forest patches and working to restore habitat connectivity will reduce the species' extinction risk.

Onychorhynchus occidentalis occurs in west Ecuador (from Esmeraldas south to El Oro) and immediately adjacent north-west Peru (Tumbes), where it is restricted to small, isolated forest patches. 
A total of 11,829 km² of remaining suitable habitat was estimated using a MaxEnt approach in 2023 (M. Sánchez Nivicela (in litt. 2024), while the minimum convex polygon extent of occurrence is 90,100 km². The fragmented nature of the remaining forest habitat, after very rapid loss during the latter part of the 20th century (Dodson and Gentry 1991), is thought to have resulted in the division of the population into multiple subpopulations. The spatial distribution of the remaining habitat, assuming a conservative dispersal distance of 10 km, indicates that there are likely at least three subpopulations present, and possibly up to ten if small habitat patches are occupied and considered isolated.

The population size has not been quantified, but the species is described as scarce, apparently naturally occurring at low densities (Ridgely and Tudor 1994, Ridgely et al. 1998, J. Hornbuckle in litt. 1999; E. Horstmann in litt. 2000, 2007; see also eBird 2024). Using a density (based on occupancy of territorial pairs) of 0.8 mature individuals per km² M. Sánchez Nivicela (in litt. 2024) derived an indicative population size of 3,641 mature individuals. The closely related Amazonian Royal Flycatcher O. coronatus was found to occur at a density of 0.5 pairs/km² in Peru, equivalent to 1 mature individual/km² (Sample et al. 2020). Acknowledging uncertainty in this value, the population size is placed in a band of 2,500-10,000 mature individuals.
Past, very rapid forest loss has resulted in considerable fragmentation of the remaining habitat, however there are at least two considerable portions of the range that are connected and while dispersal is not well-known it is suspected to be able to successfully disperse within a forested matrix. Accounting for the spatial distribution of the habitat modelled by M. Sánchez Nivicela (in litt. 2024) the largest subpopulation is likely to exceed one-third of the population size given, and therefore exceed 1,000 mature individuals (sRedList 2023).

It occurs in humid and deciduous lowland and foothill forest and along borders (Ridgely and Greenfield 2001, Freile and Restall 2018). At least in the Cerro Blanco area it appears to favour semi-deciduous forest in ravines; it has also been recorded in degraded secondary scrub (E. Horstmann in litt. 2000, 2007; Pople et al. 1997). It is possible that it may forage in a wide range of habitats, but is reliant on intact, moister forest during the breeding season (Pople et al. 1997). It forages from the understorey to subcanopy, and is often recorded within low-level mixed-species flocks (Pople et al. 1997). Nests are suspended from branches and vines above shady streams (Ridgely and Tudor 1994), and have been found in January and April, with a juvenile collected in May.

Below 900 m, the rate of deforestation in west Ecuador in 1958-1988 was 57% per decade (Dodson and Gentry 1991). Habitat loss continues, at least in unprotected areas of both Ecuador and Peru, albeit at a much slower rate, and most remaining lowland forests are in various stages of degradation (Global Forest Watch 2023).
Disturbance and degradation through grazing by goats and cattle pose the most significant threat to the understorey of deciduous forests. Even protected areas are affected by illegal settling, logging and livestock-grazing. Uncontrolled fires started to clear land for agriculture or to improve pastures for grazing are a major threat in parts of the range (E. Horstman in litt. 2000, 2008).

This species was not recorded in any of the trade databases reviewed by Donald et al. (2024) and there is no indication that the species is traded or otherwise used.

Conservation Actions Underway
The species occurs in several protected areas, including Machalilla National Park and Bosque Protector Cerro Blanco, Ecuador, as well as Cerros de Amotape National Park and Reserva Nacional de Tumbes, Peru. Habitat restoration projects using native tree species and environmental education programmes are carried out in Cerro Blanco. The species is listed as Vulnerable at the national level in Peru (SERFOR 2018). 

Conservation Actions Proposed
Survey to accurately quantify the population size. Research its ecological requirements and population structure. Research its tolerance of habitat disturbance and the impacts of forest loss and degradation on the population size. Monitor the population trend. Protect areas of suitable habitat within the range. Continue and expand habitat restoration programmes, using native plant species. Continue and expand environmental education activities.