Reproductive phase change from vegetative mycelium to the initiation of fruiting in Agaricus bisporus is regulated in large part by the sensing of environmental conditions. A model is proposed in which three separate environmental factors exert control at different stages of the reproductive developmental process change. The eight carbon volatile 1-octen-3-ol controls the early differentiation from vegetative hyphae to multicellular knots; temperature reduction is essential for the later differentiation of primodia; and carbon dioxide level exerts quantitative control on the number of fruiting bodies developed. Analysis of transcriptomic changes during the reproductive phase change was carried out with initiation-specific microarrays, and the newly published A. bisporus genome was used to analyse the promoter regions of differentially regulated genes. Our studies have shown there to be both early and late initiation responses relating to sensing of eight carbon volatiles and temperature respectively. A subset of 45 genes was transcriptionally regulated during the reproductive phase change which exhibited a range of functions including cell structure, nitrogen and carbon metabolism, and sensing and signalling. Three gene clusters linking increased transcription with developmental stage were identified. Analysis of promoter regions revealed cluster-specific conserved motifs indicative of co-ordinated regulation of transcription.