Cryptococcus neoformans var. gattii is emerging as a primary human pathogen which is distinct genetically and biochemically from C. neoformans var. neoformans. There is increasing evidence that it should be reclassified as a separate species within the Tremellales. In nature, C. n. var. gattii has been consistently isolated from decaying wood in hollows of species of the red gum group of eucalyptus trees (Eucalyptus ser. Exsertae Blakely). The role that trees play in the life-cycle of C. n. var. gattii is not known, but its association with decaying wood is suggestive of an endophytic existence, in common with other wood-rot fungi. Despite the demonstration in the laboratory of sexual reproduction between mating types oc and a of F. neoformans var. gattii, this has not been demonstrated in nature. Human cryptococcosis develops following environmental exposure and inhalation of the infectious propagule. Whether this is the basidiospore or dessicated yeast form is uncertain. The major risk factor for development of disease appears to be exposure, though there is indirect evidence that unidentified host factors may contribute to the relatively high incidence of cryptococcosis in Australian Aboriginals. The rarity of cryptococcosis due to C. n. var. gattii in immunocompromised patients remains unexplained. Virulence determinants of C. neoformans are currently the subject of intensive investigation, especially in C. n. var. neoformans. The best-characterized, major, virulence determinants in this variety, the polysaccharide capsule, products of the laccase enzyme pathway and ability to grow at physiological temperatures, contribute to its survival in the host. They are also present in C. n. var. gattii. A potential determinant of tissue invasion, secreted phospholipase B, is produced in vitro and in vivo by C. n. var. gattii. This enzyme has now been confirmed to play a role in the virulence of C. neoformans serotype A. Disease caused by C. n. var. gattii is distinguished from that due to C. n. var. neoformans by an increased incidence of cryptococcomas in lung and brain, increased neurological morbidity and a slower response to antifungal therapy. The difference in clinical presentation is predominantly due to the effect of underlying immunocompromise in patients infected with C. n. var. neoformans.