Sexual reproduction and genetic exchange are important for the evolution of fungal pathogens and for producing potentially infective spores. Studies to determine whether sex occurs in the pathogenic yeast Cryptococcus neoformans var. grubii have produced enigmatic results, however: basidiospores are the most likely infective propagules, and clinical isolates are fertile and genetically diverse, consistent with a sexual species, but almost all populations examined consist of a single mating type and have little evidence for genetic recombination. The choice of population is critical when looking for recombination, particularly when significant asexual propagation is likely and when latency may complicate assessing the origin of an isolate. We therefore selected isolates from infected animals living in the region of Sydney, Australia, with the assumption that the relatively short life spans and limited travels of the animal hosts would provide a very defined population. All isolates were mating type alpha and were of molecular genotype VNI or VNII. A lack of linkage disequilibrium among loci suggested that genetic exchange occurred within both genotype groups. Four diploid VNII isolates that produced filaments and basidium-like structures when cultured in proximity to an a mating type strain were found. Recent studies suggest that compatible alpha-alpha unions can occur in C. neoformans var. neoformans populations and in populations of the sibling species Cryptococcus gattii. As a mating type strains of C. neoformans var. grubii have never been found in Australia, or in the VNII molecular type globally, the potential for alpha-alpha unions is evidence that alpha-alpha unisexual mating maintains sexual recombination and diversity in this pathogen and may produce infectious propagules.