Fungi typically grow by apical extension of hyphae that penetrate moist substrates. After establishing a branched feeding mycelium, the hyphae differentiate and grow away from the substrate into the air where they form various structures such as aerial hyphae and mushrooms. In the basidiomycete species Schizophyllum commune, we previously identified a family of homologous genes that code for small cysteine-rich hydrophobic proteins. We now report that the encoded hydrophobins are excreted in abundance into the culture medium by submerged feeding hyphae but form highly insoluble complexes in the walls of emerging hyphae. The Sc3 gene encodes a hydrophobin present in walls of aerial hyphae. The homologous Sc1 and Sc4 genes, which are regulated by the mating-type genes, encode hydrophobins present in walls of fruit body hyphae. The hydrophobins are probably instrumental in the emergence of these aerial structures.