Sex determination in fungi is controlled by a small, specialized region of the genome in contrast to the large sex-specific chromosomes of animals and some plants. Different gene combinations reside at these mating-type (MAT) loci and confer sexual identity; invariably they encode homeodomain, alpha-box, or high mobility group (HMG)-domain transcription factors. So far, MAT loci have been characterized from a single monophyletic clade of fungi, the Dikarya (the ascomycetes and basidiomycetes), and the ancestral state and evolutionary history of these loci have remained a mystery. Mating in the basal members of the kingdom has been less well studied, and even their precise taxonomic inter-relationships are still obscure. Here we apply bioinformatic and genetic mapping to identify the sex-determining (sex) region in Phycomyces blakesleeanus (Zygomycota), which represents an early branch within the fungi. Each sex allele contains a single gene that encodes an HMG-domain protein, implicating the HMG-domain proteins as an earlier form of fungal MAT loci. Additionally, one allele also contains a copy of a unique, chromosome-specific repetitive element, suggesting a generalized mechanism for the earliest steps in the evolution of sex determination and sex chromosome structure in eukaryotes.