This ultrastructural study of two closely related liverworts with contrasting modes of nutrition reveals very similar interactions with endophytic dikaryotic basidiomycetes. In both hepatics, collected from a variety of sites, the fungus is confined to specific regions of the gametophyte thallus, and hyphal contact with the substratum is via the rhizoids. The colonization cycle comprises a growth phase when the fungus forms large intracellular coils, host cytoplasm proliferates and the starch content of the plastids decreases, followed by senescence when the hyphae die back and aggregate into large masses. Repeated colonization cycles are frequent. Young hyphae contain abundant glycogen and sometimes amyloid deposits in Cryptothallus. In terms of dolipore substructure, hyphal dimensions, highly characteristic multilayered walls, absence of clamp connections, and the mode of hyphal degeneration, the endophyte in Cryptothallus is virtually identical to that in Aneura from alpine sites but very different from the fungus in Aneura from sand dunes and a chalk pit. It is suggested that Cryptothallus evolved from an Aneura-like ancestor through association with a fungal saprophyte of waterlogged peaty soils. Differences in dolipore morphology in the ectomycorrhizal fungus of Betula roots growing in association with Cryptothallus indicate that these two hosts do not share the same fungus. Remarkable similarities between the fungal associations in Cryptothallus and Aneura and orchidaceous mycorrhizae include the same colonization cycle, absence of polyphosphate granules, and separation of the host plasma membrane from thin-walled, exclusively intracellular hyphae by a prominent interfacial matrix. Key words: basidiomycetes, dolipores, liverworts, mycorrhiza, symbiosis, ultrastructure.