Cockatiels are slender, with long pointed wings, a bare cere, a long tail, and a prominent yellow crest. The crest is usually held erect except during resting periods and (sometimes) feeding periods. The plumage is generally mid-grey, lighter underneath, with an orange ear patch and a prominent white blaze on the wings. A row of yellowish spots can be found underneath the wings of female Cockatiels, but not on the males. Both sexes have yellow facial feathers: the female has a yellow wash around the beak and eye, in the male, yellow covers most of the head and the fore part of the crest.

The Cockatiel's scientific name reflects the experience of one of the earliest groups of Europeans to see Cockatiels in their native habitat. Travellers thought they were so beautiful that they named them after the mythical beauties, the nymphs. The species name refers to New Holland, an old name for Australia.

Like the Budgerigar, they are popular household pets in the United States, England, Australia, and many other parts of the world. Today all pet Cockatiels are bred in captivity, as Australia no longer permits the export of native wildlife, whether endangered or not. Pet Cockatiels have been bred to have many different coloration patterns, mutations such as Lutino, Pearl, Cinnamon, Pied and Whiteface. Thus they can look quite different from Cockatiels found in the wild.

If hand-fed as babies, they have very loving dispositions toward their owners. Their popularity as pets is in part because they have such a calm temperament by nature, to the point they can even be bullied by smaller but more confident birds such as budgies.

Although Cockatiels are part of the parrot order, they are better at imitating whistles than at talking. Some do learn to repeat phrases, but the males are generally better at mimickry than the females are.