Transformation with exogenous deoxyribonucleic acid (DNA) now appears to be possible with all fungal species, or at least all that can be grown in culture. This field of research is at present dominated by Saccharomyces cerevisiae and two filamentous members of the class Ascomycetes, Aspergillus nidulans and Neurospora crassa, with substantial contributions also from fission yeast (Schizosaccharomyces pombe) and another filamentous member of the class Ascomycetes, Podospora anserina. However, transformation has been demonstrated, and will no doubt be extensively used, in representatives of most of the main fungal classes, including Phycomycetes, Basidiomycetes (the order Agaricales and Ustilago species), and a number of the Fungi Imperfecti. The list includes a number of plant pathogens, and transformation is likely to become important in the analysis of the molecular basis of pathogenicity. Transformation may be maintained either by using an autonomously replicating plasmid as a vehicle for the transforming DNA or through integration of the DNA into the chromosomes. In S. cerevisiae and other yeasts, a variety of autonomously replicating plasmids have been used successfully, some of them designed for use as shuttle vectors for Escherichia coli as well as for yeast transformation. Suitable plasmids are not yet available for use in filamentous fungi, in which stable transformation is dependent on chromosomal integration. In Saccharomyces cerevisiae, integration of transforming DNA is virtually always by homology; in filamentous fungi, in contrast, it occurs just as frequently at nonhomologous (ectopic) chromosomal sites. The main importance of transformation in fungi at present is in connection with gene cloning and the analysis of gene function. The most advanced work is being done with S. cerevisiae, in which the virtual restriction of stable DNA integration to homologous chromosome loci enables gene disruption and gene replacement to be carried out with greater precision and efficiency than is possible in other species that show a high proportion of DNA integration events at nonhomologous (ectopic) sites. With a little more trouble, however, the methodology pioneered for S. cerevisiae can be applied to other fungi too. Transformation of fungi with DNA constructs designed for high gene expression and efficient secretion of gene products appears to have great commercial potential.