This is the first report of a Cryptococcus neoformans var. gattii strain (serotype B) that switches reversibly between its parent mucoid (NP1-MC) colony morphology and a smooth (NP1-SM) colony morphology. Similar to C. neoformans var. grubii and C. neoformans var. neoformans strains, the switch is associated with changes in the polysaccharide capsule and virulence in animal models. In murine infection models, NP1-MC is significantly more virulent than NP1-SM (P < 0.021). In contrast to the serotype A and D strains, the serotype B strain switches in vivo reversibly between both colony morphologies. The polysaccharide of NP1-MC exhibits a thicker capsule, and thus NP1-MC exhibits enhanced intracellular survival in macrophages. Consistent with this finding, switching to the mucoid variant is observed in pulmonary infection with NP1-SM. In contrast, the thin polysaccharide capsule of NP1-SM permits better crossing of the blood-brain barrier. In this regard, only smooth colonies were grown from brain homogenates of NP1-MC-infected mice. Our findings have important implications for the pathogenesis of cryptococcosis and suggest that phenotypic switching affects host-pathogen interactions in the local microenvironment. This altered interaction then selects for specific colony variants to arise in a pathogen population.