Commercial cultivation of the mushroom fungus, Agaricus bisporus, utilizes a substrate consisting of a lower layer of compost and upper layer of peat. Typically, the two layers are seeded with individual mycelial inoculants representing a single genotype of A. bisporus. Studies aimed at examining the potential of this fungal species as a heterologous protein expression system have revealed unexpected contributions of the mycelial inoculants in the morphogenesis of the fruiting body. These contributions were elucidated using a dual-inoculant method whereby the two layers were differientially inoculated with transgenic ß-glucuronidase (GUS) and wild-type (WT) lines. Surprisingly, use of a transgenic GUS line in the lower substrate and a WT line in the upper substrate yielded fruiting bodies expressing GUS activity while lacking the GUS transgene. Results of PCR and RT-PCR analyses for the GUS transgene and RNA transcript, respectively, suggested translocation of the GUS protein from the transgenic mycelium colonizing the lower layer into the fruiting body that developed exclusively from WT mycelium colonizing the upper layer. Effective translocation of the GUS protein depended on the use of a transgenic line in the lower layer in which the GUS gene was controlled by a vegetative mycelium-active promoter (laccase 2 and ß-actin), rather than a fruiting body-active promoter (hydrophobin A). GUS-expressing fruiting bodies lacking the GUS gene had a bonafide WT genotype, confirmed by the absence of stably inherited GUS and hygromycin phosphotransferase selectable marker activities in their derived basidiospores and mycelial tissue cultures. Differientially inoculating the two substrate layers with individual lines carrying the GUS gene controlled by different tissue-preferred promoters resulted in up to a ∼3.5-fold increase in GUS activity over that obtained with a single inoculant. Our findings support the existence of a previously undescribed phenomenon of long-distance protein translocation in A. bisporus that has potential application in recombinant protein expression and biotechnological approaches for crop improvement.