Graphiola phoenicis was restudied by light microscopy and investigated in detail with the scanning and the transmission electron microscopes. Hyphae of the fruitbody are mainly dikaryotic. Karyogamy occurs in cells which are interpreted as meiosporangia (basidia), and which develop in chains. Shortly after karyogamy, meiosis takes place in these basidia. Primary, sessile meiospores are then formed which later divide and produce thick-walled diaspores. The latter germinate either by hyphae or by yeast-like budding. The nutritional requirements of pure cultures of the yeast stage were also investigated. Life cycle, karyological criteria, ultrastructural details, and chemical tests clearly show thatGraphiola belongs in theBasidiomycetes. The taxonomic position within theHeterobasidiomycetes is discussed and the orderGraphiolales is validated.