The young star R Monocerotis (R Mon) and its fan shaped reflection nebula NGC 2261 are one of the most thoroughly investigated star and nebula systems in the last 100 years. The nebula has been observed since the times of Sir William Herschel and the illuminating source R Mon has been known as a variable source for almost 150 years, fluctuating by as much as 4 magnitudes in brightness. In 1916 Edwin Hubble found that the nebula could change in brightness on a timescale of months and since has been known as Hubble's Variable Nebula.

It was only recently that R Mon was recognized as a young stellar object or protostar. Mounting evidence of its true nature as an active Young Stellar Object (YSO) or protostar includes bidirectional gas outflows, Herbig-Haro jets, and a molecular accretion disk all classic properties of pre-main-sequence stars. The nature of the nebula component NGC 2261 is that of a hollow conical shaped dust cloud illuminated by R Mon at its base. The rapid changes in nebula brightness are in fact shadows cast by dusty matter moving in a circular orbit around R Mon. The visible nebula is about 0.2 by 0.4 light years in size.

HST observations of the complex has shed much light on its nature. The star R Mon is known as a Hebig Ae/Be star. These stars are higher mass type A or B stars that are in the pre-main-sequence stage and are often associated with nebulosity. They are the high mass counterparts of T-Tauri stars. R Mon is a 10 solar mass B type star with a small companion, R Mon "B".

The visible nebula is a prototypical cometary reflection nebula. It is essentially a small dark cloud where the optical counterpart is created by molecular outflows powered by the pre-main-sequence star R Mon. An extensive molecular accretion disk surrounding R Mon collimates the molecular flow into two components that extend both north and south from the star. The southern flow is directed into the dark cloud but the northern flow is directed in our direction and illuminates the reflection nebula, a hollowed out parabolic shell or conical shaped structure with its apex facing R Mon. The variable nature of the nebula may be due to infall of matter in the vicinity of R Mon which cast shadows on the wall of the parabolic shell. The nebula is known to vary in brightness by up to two full magnitudes.