The rDNA internal transcribed spacer (ITS) region has been accepted as a DNA barcoding marker for fungi and is widely used in phylogenetic studies; however, intragenomic ITS variability has been observed in a broad range of taxa, including prokaryotes, plants, animals, and fungi, and this variability has the potential to inflate species richness estimates in molecular investigations of environmental samples. In this study 454 amplicon pyrosequencing of the ITS1 region was applied to 99 phylogenetically diverse axenic single-spore cultures of fungi (Dikarya: Ascomycota and Basidiomycota) to investigate levels of intragenomic variation. Three species (one Basidiomycota and two Ascomycota), in addition to a positive control species known to contain ITS paralogs, displayed levels of molecular variation indicative of intragenomic variation; taxon inflation due to presumed intragenomic variation was ≈9%. Intragenomic variability in the ITS region appears to be widespread but relatively rare in fungi (≈3–5% of species investigated in this study), suggesting this problem may have minor impacts on species richness estimates relative to PCR and/or pyrosequencing errors. Our results indicate that 454 amplicon pyrosequencing represents a powerful tool for investigating levels of ITS intragenomic variability across taxa, which may be valuable for better understanding the fundamental mechanisms underlying concerted evolution of repetitive DNA regions.