The signaling molecule cyclic AMP (cAMP) is a ubiquitous second messenger that enables cells to detect and respond to extracellular signals. cAMP is generated by the enzyme adenylyl cyclase, which is activated or inhibited by the Galpha subunits of heterotrimeric G proteins in response to ligand-activated G-protein-coupled receptors. Here we identified the unique gene (CAC1) encoding adenylyl cyclase in the opportunistic fungal pathogen Cryptococcus neoformans. The CAC1 gene was disrupted by transformation and homologous recombination. In stark contrast to the situation for Saccharomyces cerevisiae, in which adenylyl cyclase is essential, C. neoformans cac1 mutant strains were viable and had no vegetative growth defect. Furthermore, cac1 mutants maintained the yeast-like morphology of wild-type cells, in contrast to the constitutively filamentous phenotype found upon the loss of adenylyl cyclase in another basidiomycete pathogen, Ustilago maydis. Like C. neoformans mutants lacking the Galpha protein Gpal, cac1 mutants were mating defective and failed to produce two inducible virulence factors: capsule and melanin. As a consequence, cac1 mutant strains were avirulent in animal models of cryptococcal meningitis. Reintroduction of the wild-type CAC1 gene or the addition of exogenous cAMP suppressed cac1 mutant phenotypes. Moreover, the overexpression of adenylyl cyclase restored mating and virulence factor production in gpal mutant strains. Physiological studies revealed that the Galpha protein Gpa1 and adenylyl cyclase controlled cAMP production in response to glucose, and no cAMP was detectable in extracts from cac1 or gpa1 mutant strains. These findings provide direct evidence that Gpal and adenylyl cyclase function in a conserved signal transduction pathway controlling cAMP production, hyphal differentiation, and virulence of this human fungal pathogen.