The velvet gene, veA, co-ordinates asexual and sexual development in the homothallic fungal species Aspergillus nidulans. Studies in Aspergillus parasiticus and Aspergillus fumigatus demonstrated that veA also regulates morphological differentiation in these species. Whether veA has the same role in morphogenesis in other fungal genera has not been investigated. In this work, we studied the role of the veA homologue, FvVE1, in the heterothallic fungus Fusarium verticillioides. Deletion of FvVE1 suppressed aerial hyphal growth and reduced colony surface hydrophobicity on solid media. In submerged cultures, FvVE1 deletion caused alterations in hyphal polarity, marked activation of conidiation and yeast-like growth. The latter was promoted by shaking to increase aeration of cultures. In addition, FvVE1 deletion markedly increased the ratio of macroconidia to microconidia. Supplementation of osmotic stabilizers restored the wild-type phenotype to deletion mutants, suggesting phenotypic alterations caused by FvVE1 deletion are related to cell wall defects. This is consistent with the hypersensitivity of FvVE1 deletion mutants to SDS and with the significant reduction in the mannoprotein content of mutants compared with the wild-type strain. However, no dramatic cell wall alterations were observed when mutants were examined by transmission electron microscopy. Our data strongly suggest that FvVE1 is important for cell wall integrity, cell surface hydrophobicity, hyphal polarity and conidiation pattern.