Blue light is necessary for initiation of mushroom formation in Schizophyllum commune. The genome of this basidiomycete contains homologues of the blue light receptor genes wc-1 and wc-2 of Neurospora crassa. Here, it is shown that inactivation of either or both of these genes in S. commune results in a blind phenotype. Mushroom formation was abolished in dikaryons and they formed symmetrical instead of asymmetrical colonies. Development was restored in a temperature dependent way in a Δwc-2Δwc-2 strain by introducing a construct encompassing the wc-2 gene under control of the promoter of the heat shock gene hsp3. A genome-wide expression analysis showed that the transcription factor genes c2h2 and hom1 as well as many hydrophobin genes are downregulated in light-grown colonies of the Δwc-2Δwc-2 mutant when compared with the wild-type dikaryon. Inactivation of wc-1 and/or wc-2 also resulted in sensitivity of the mycelium to intense light. Monokaryotic mutant strains only survived exposure to 6500 lux of light by growing into the agar. Expression analysis indicates that the photosensitivity of the Δwc-1 and Δwc-2 strains is due to lower levels of photolyase and ferrochelatase.