Fungi in the genus Malassezia are ubiquitous skin residents of humans and other warm-blooded animals. Malassezia are involved in disorders including dandruff and seborrheic dermatitis, which together affect >50% of humans. Despite the importance of Malassezia in common skin diseases, remarkably little is known at the molecular level. We describe the genome, secretory proteome, and expression of selected genes of Malassezia globosa. Further, we report a comparative survey of the genome and secretory proteome of Malassezia restricta, a close relative implicated in similar skin disorders. Adaptation to the skin environment and associated pathogenicity may be due to unique metabolic limitations and capabilities. For example, the lipid dependence of M. globosa can be explained by the apparent absence of a fatty acid synthase gene. The inability to synthesize fatty acids may be complemented by the presence of multiple secreted lipases to aid in harvesting host lipids. In addition, an abundance of genes encoding secreted hydrolases (e.g., lipases, phospholipases, aspartyl proteases, and acid sphingomyelinases) was found in the M. globosa genome. In contrast, the phylogenetically closely related plant pathogen Ustilago maydis encodes a different arsenal of extracellular hydrolases with more copies of glycosyl hydrolase genes. M. globosa shares a similar arsenal of extracellular hydrolases with the phylogenetically distant human pathogen, Candida albicans, which occupies a similar niche, indicating the importance of host-specific adaptation. The M. globosa genome sequence also revealed the presence of mating-type genes, providing an indication that Malassezia may be capable of sex.