Degus are highly social. They live in burrows, and, by digging communally, they are able to construct larger and more elaborate burrows than they could on their own. Degus digging together coordinate their activities, forming digging chains. Females living in the same group have been shown to spontaneously nest communally; they nurse one another's young. They spend a large amount of time on the surface, where they forage for food. When foraging, their ability to detect predators is increased in larger groups, and each animal needs to spend less time in vigilance. Degus exhibit a wide array of communication techniques. They have an elaborate vocal repertoire, and the young need to be able to hear their mother's calls if the emotional systems in their brains are to develop properly. They use their urine to scent mark, and experiments have shown that they react to one another's marks.Some degus bite when they don't know your smell... so try to let them smell you before picking a degu up.

Degus are seasonal breeders; the breeding season for wild degus begins in the Chilean winter, with pups born mid-late spring. It is also speculated that female degus are induced ovulators. Female degus are pregnant for approximately ninety days, having a long gestation period compared to other squirrels and even rodents such as hamsters. Litters usually contain four to seven pups, but size can range from one or two up to fifteen young. Degu pups are born relatively precocial, fully furred and with eyes open, and their auditory and visual systems are functional at birth.

Unlike other octodontids, degus are diurnal, and they have good vision. Their retinas include rod cells and two types of cone cells, one of which has its peak sensitivity in the ultraviolet region of the spectrum. Behavioral experiments have shown that degus are able to discriminate ultraviolet light from the wavelengths visible to humans. It is likely that this ultraviolet sensitivity has a social function, since both their ventral (stomach) fur and their urine are highly UV reflective.