Filamentous fungi grow as a multicellular, multinuclear network of filament-shaped cells called hyphae. A fungal individual can be viewed as a fluid, dynamic system that is characterized by hyphal tip growth, branching, and hyphal fusion (anastomosis). Hyphal anastomosis is especially important in such nonlinear systems for the purposes of communication and homeostasis. Filamentous fungi can also undergo hyphal fusion with different individuals to form heterokaryons. However, the viability of such heterokaryons is dependent upon genetic constitution at heterokaryon incompatibility (het) loci. If hyphal fusion occurs between strains that differ in allelic specificity at het loci, vegetative incompatibility, which is characterized by hyphal compartmentation and cell lysis, is induced. This review covers microscopic and genetic analysis of hyphal fusion and the molecular and genetic analysis of the consequence of hyphal fusion between individuals that differ in specificity at het loci in filamentous ascomycetes.