Schizophyllum commune has thousands of mating types defined in part by numerous lipopeptide pheromones and their G-protein-coupled receptors. These molecules are encoded within multiple versions of two redundantly functioning B mating-type loci, B alpha and B beta. Compatible combinations of pheromones and receptors, produced by individuals of different B mating types, trigger a pathway of fertilization required for sexual development. Analysis of the B beta 2 mating-type locus revealed a large cluster of genes encoding a single pheromone receptor and eight different pheromones. Phenotypic effects of mutations within these genes indicated that small changes in both types of molecules could significantly alter their specificity of interaction. For example, a conservative amino acid substitution in a pheromone resulted in a gain of function toward one receptor and a loss of function with another. A two-amino-acid deletion from a receptor precluded the mutant pheromone from activating the mutant receptor, yet this receptor was activated by other pheromones. Sequence comparisons provided clues toward understanding how so many variants of these multigenic loci could have evolved through duplication and mutational divergence. A three-step model for the origin of new variants comparable to those found in nature is presented.