The ectomycorrhizal fungus Tricholoma matsutake grows symbiotically with Pinus densiflora. Phenylalanine ammonia-lyase (E.C. 188.8.131.52) catalyzes the conversion of L-phenylalanine to trans-cinnamic acid. The role of fungal phenylalanine ammonia-lyase, however, has not been clear until now. In this study, the gene encoding phenylalanine ammonia-lyase (PAL), which was isolated from T. matsutake, was cloned and characterized. The PAL gene (tmpal) consists of 2,160 nucleotides, coding for a polypeptide containing 719 amino acid residues. The deduced amino acid sequence of tmpal from T. matsutake shows high identity (70%) with that from Laccaria bicolor. Comparative analysis of the PAL genes among T. matsutake and other species of the class Agaricomycetes showed that both active sites and binding sites were significantly conserved among these genes. The transcriptional analysis of the PAL gene revealed a differential gene expression pattern depending on the developmental stages (mycelium, primordium, stipe, pileus, and gills) of T. matsutake. These results suggest that the PAL gene in T. matsutake plays an important role in multiple physiological functions.