Sexual identity is governed by sex chromosomes in plants and animals, and by mating type (MAT) loci in fungi. Comparative analysis of the MAT locus from a species cluster of the human fungal pathogen Cryptococcus revealed sequential evolutionary events that fashioned this large, highly unusual region. We hypothesize that MAT evolved via four main steps, beginning with acquisition of genes into two unlinked sex-determining regions, forming independent gene clusters that then fused via chromosomal translocation. A transitional tripolar intermediate state then converted to a bipolar system via gene conversion or recombination between the linked and unlinked sex-determining regions. MAT was subsequently subjected to intra- and interallelic gene conversion and inversions that suppress recombination. These events resemble those that shaped mammalian sex chromosomes, illustrating convergent evolution in sex-determining structures in the animal and fungal kingdoms.