Cryptococcus neoformans, an encapsulated fungal pathogen, causes meningoencephalitis in immunocompromised patients. Recent in vivo studies have demonstrated that C. neoformans is a facultative intracellular pathogen, as was previously suggested by in vitro studies. For survival in macrophages, C. neoformans utilizes a novel strategy for intracellular parasitism that includes the accumulation of intracellular polysaccharide in cytoplasmic vesicles. Confirmation of the fact that C. neoformans is a facultative intracellular pathogen could provide new insights into several poorly understood areas of cryptococcal pathogenesis, including mechanisms for latency and persistence and the lack of efficacy of humoral immunity. The finding that C. neoformans replicates inside macrophages in vitro in a manner similar to that observed in vivo provides an excellent system to dissect the molecular mechanisms responsible for this unique pathogenic strategy.