The 100,000 identified species of organisms commonly classed together as fungi are customarily divided into four phyla, or divisions: Zygomycota, Ascomycota, Basidiomycota, and Deuteromycota.

Zygomycota includes black bread mold and molds, such as those of the genus Glomus, that form important symbiotic relationships with plants. Most are soil-living saprobes that feed on dead animal or plant remains. Some are parasitic of plants or insects. They reproduce sexually and form tough zygospores from the fusion of neighboring gametangia. There is no distinguishable male or female.

Ascomycota includes yeasts, the powdery mildews, the black and blue-green molds, edible types such as the morel and the truffle, and species that cause such diseases of plants as Dutch elm disease, chestnut blight, apple scab, and ergot. There are over 50,000 species, about 25,000 of which occur only in lichens. In ascomycetes, the hyphae are subdivided by porous walls through which the cytoplasm and the nuclei can pass. Their life cycle is a complex combination of sexual and asexual reproduction.

Basidiomycota includes the gill fungi (most mushrooms), the pore fungi (e.g., the bracket fungi, which grow shelflike on trees, and an edible type called tuckahoe), and the puffballs. It also includes the fungi that cause smut and rust in plants. Like ascomycetes, the hyphae are subdivided by porous walls. In basidiomycetes, two hyphae fuse to form a dikaryotic mycelium (a mycelium in which both nuclei remain distinct). These mycelia differentiate into reproductive structures called basidia that make up the basidiocarp (the body popularly known as the mushroom cap). The nuclei then fuse and undergo meiosis, creating spores with one nucleus each. When these spores germinate, they produce hyphae, and the process begins again.

Deuteromycota comprises a miscellaneous assortment of fungi that do not not fit neatly in other divisions; they have in common an apparent lack of sexual reproductive features. Also called Fungi Imperfecti, the group includes species that help create Roquefort and Camembert cheeses, that cause diseases of plants and of animals (e.g., athlete's foot and ringworm), and that produce penicillin. A number of the fungi classified as deuteromycetes have been found to be asexual stages of species in other groups, and some classification schemes consider the deuteromycetes a class under Ascomycota.

Fungi are valuable economically as a source of antibiotics, of vitamins, and of various industrially important chemicals, such as alcohols, acetone, and enzymes, as well as for their role in fermentation processes, as in the production of alcoholic beverages, vinegar, cheese, and bread dough. They are extremely important in soil renewal, through the decomposition of organic matter (see humus)—a function unwelcome when it results in the rotting of clothing and other goods and the spoilage of foods.