The basidiomycete fungus Schizophyllum commune has been utilised as a model system for examining the genetic regulation of sexual reproduction, a process that culminates in the production of mushrooms in this and many other related species. Recent studies have suggested that conserved elements of the cyclic AMP (cAMP) signalling pathway play a role in the control of mushroom development in S. commune. The small G-protein Ras also appears to impinge on the process, either by inputting into the cAMP pathway, or by acting in parallel. The molecular connections between nutrient sensing and mushroom development are now beginning to be examined.