Fruiting bodies (mushrooms) can be induced to form in unmated, normally non-fruiting strains of the basidiomycete fungus Schizophyllum commune by the ectopic genomic integration of a cloned gene called Frt1. Thus, the normal requirement of mating for mushroom formation is bypassed. Sequence analysis of genomic and cDNA clones revealed that the Frt1 gene encodes a predicted polypeptide of 192 amino acids, interrupted by three short introns. The FRT1 protein is predicted to be of M(r) 21,625 and does not have significant overall similarity to any known proteins. Analysis of the predicted amino acid sequence revealed the presence of a P-loop motif, a conserved sequence found in nucleotide-binding proteins. A potential site for Mg2+ binding is predicted to reside next to the P-loop at Thr24. The possible functional significance of these and other residues within FRT1 was examined using site-directed mutagenesis, followed by transformation of these mutant alleles of Frt1 back into S. commune. Mutation of the middle glycine of the P-loop completely abolished the fruit-inducing activity of cloned Frt1. Substitution of an alanine residue for Thr24 also resulted in mutant clones with no fruit-inducing activity. The possibility of an interaction between two closely spaced threonine residues within FRT1 was suggested by transformation experiments utilizing mutant Frt1 alleles with specific combinations of mutations at these sites. Taken together, the results of our mutagenesis experiments suggest the possibility that activity of the predicted FRT1 protein could be altered by nucleotide binding and coordination of Mg2+. Northern blot hybridization experiments indicate that Frt1 activity is probably not controlled at the transcriptional level.