Neurospora crassa fluffy (fl) mutants are unable to produce macroconidia. We cloned the fl gene to determine its role in regulating conidiation. A cosmid clone containing fl was identified by complementation. The sequence of fl revealed that it encodes a Gal4p-type C6 zinc cluster protein with greatest similarity to the N. crassa NIT4 protein that regulates genes required for nitrate utilization. Analysis of several fl mutant alleles demonstrated that null mutants are blocked in the budding phase of development required to produce conidiophores. fl mRNA is transiently induced just prior to the developmental commitment to budding growth. This timing of fl expression is consistent with a role for FL protein in activation of the previously characterized conidiation-specific (con) genes, con-6 and con-10. These data suggest that FL acts as a developmentally regulated transcription factor required for conidiophore morphogenesis.