The human pathogenic fungus Cryptococcus neoformans secretes a phospholipase enzyme that demonstrates phospholipase B (PLB), lysophospholipase hydrolase and lysophospholipase transacylase activities. This enzyme has been postulated to be a cryptococcal virulence factor. We cloned a phospholipase-encoding gene (PLB1) from C. neoformans and constructed plb1 mutants using targeted gene disruption. All three enzyme activities were markedly reduced in the mutants compared with the wild-type parent. The plb1 strains did not have any defects in the known cryptococcal virulence phenotypes of growth at 37 degrees C, capsule formation, laccase activity and urease activity. The plb1 strains were reconstituted using the wild-type locus and this resulted in restoration of all extracellular PLB activities. In vivo testing demonstrated that the plb1 strain was significantly less virulent than the control strains in both the mouse inhalational model and the rabbit meningitis model. We also found that the plb1 strain exhibited a growth defect in a macrophage-like cell line. These data demonstrate that secretory phospholipase is a virulence factor for C. neoformans.