The genome of Laccaria bicolor is the first fully sequenced symbiotic filamentous fungi. A representative of basidiomycota, it possesses the largest genome (65Mb) encoding the largest number of genes (~20,000) gained via expansion of known fungal gene families as well as the appearance of new Laccaria specific gene families. The latter include genes involved in signaling and may reflect the complex lifestyle of Laccaria, which can grow within soil and enter into symbiotic relationships with plant roots. We detected a large number of small secreted proteins with unknown function, several of which are only expressed in symbiotic tissues. L. bicolor also lacks carbohydrate-active enzymes involved in degradation of plant cell walls while its ability to degrade non-plant cell wall polysaccharides reveals the dual saprotrophic and biotrophic lifestyle of this mycorrhizal fungus. The availability of this genome provides opportunity to further understand the processes of symbiotic interactions with plants, essential for sustainable plant growth.