Domestication provides a window into adaptive change. Over the course of 2 decades of laboratory culture, a strain of the nematode-specific fungus Drechmeria coniospora became more virulent during its infection of Caenorhabditis elegans. Through a close comparative examination of the genome sequences of the original strain and its more pathogenic derivative, we identified a small number of non-synonymous mutations in protein-coding genes. In one case, the mutation was predicted to affect a gene involved in hypoxia resistance and we provide direct corroborative evidence for such an effect. The mutated genes with functional annotation were all predicted to impact the general physiology of the fungus and this was reflected in an increased in vitro growth, even in the absence of C. elegans. While most cases involved single nucleotide substitutions predicted to lead to a loss of function, we also observed a predicted restoration of gene function through deletion of an extraneous tandem repeat. This latter change affected the regulatory subunit of a cAMP-dependent protein kinase. Remarkably, we also found a mutation in a gene for a second protein of the same, protein kinase A, pathway. Together, we predict that they result in a stronger repression of the pathway for given levels of ATP and adenylate cyclase activity. Finally, we also identified mutations in a few lineage-specific genes of unknown function that are candidates for factors that influence virulence in a more direct manner.