Mycorrhizal symbioses are a rule in nature and may have been crucial in plant and fungal evolution. Ectomycorrhizas are mutualistic interactions between tree roots and soil fungi typical of temperate and boreal forests. The functional analysis of genes involved in developmental and metabolic processes, such as N nutrition, is important to understand the ontogeny of this mutualistic symbiosis. RNA silencing was accomplished in the model mycorrhizal fungus Laccaria bicolor by Agrobacterium-mediated gene transfer. Promoter-directed expression of double-stranded RNA with a partial coding sequence of the Laccaria nitrate reductase gene resulted in fungal transgenic strains strongly affected in growth with nitrate as N source in a medium with high concentration of an utilizable C source. The phenotype correlated with a clear reduction of the target gene mRNA level and this effect was not caused by homologous recombination of the T-DNA in the nitrate reductase locus. Transformation with the hairpin sequence resulted in specific CpG methylation of both the silenced transgene and the nitrate reductase encoding gene. The methylation in the target gene was restricted to the silencing trigger sequence and did not represent the entire genomic DNA in the dikaryon suggesting that the epigenetic changes accompanying RNA silencing affected only the transformed nucleus. Mycorrhization experiments of Populus with strongly silenced fungal strains revealed a systematic inhibition of symbiosis under mycorrhization conditions (C starvation) and nitrate as N source compared with the wild type. This inhibition of mycorrhization was reversed by an organic N source only utilizable by the fungus. These observations would indicate that the plant may be capable of monitoring and detecting the nutritional status of a potential symbiont avoiding the establishment of an unsatisfactory interaction. A probable control mechanism conducted by the plant would inhibit symbiosis when the metabolic profile of the fungal partner is not proper and mutual benefit from the symbiotic structure cannot be assured. Our results are the first report showing that the alteration of expression of a fungal gene impairs mycorrhization. Moreover, this work is the first demonstration of RNA silencing in mycorrhizal fungi and clearly shows that gene knock-down is a powerful tool for further functional genomic studies in mycorrhizal research.