The evolutionary mechanisms that give rise to microsatellite alleles remain poorly understood in general and are especially understudied for fungal microsatellite loci. The unusual G28 microsatellite locus was developed from the Hawaiian mushroom Rhodocollybia laulaha. Here we employ a novel approach to test for allele size homoplasy and examine competing mechanistic models of microsatellite evolution in the context of biogeographic expectations for this locus based on Hawaiian geologic history. Seven G28 alleles have been identified from a sampling of 153 individuals. The G28 locus is comprised of a tri-nucleotide, imperfect motif which permits examination of the relationships between alleles and allows for detection of potential size homoplasy within the repetitive element. Alignment of G28 allele sequence data across multiple unrelated individuals suggests that alleles of like size are homologous within Hawaii. A variety of gap coding methods are explored in the inference of allele evolution. Length differences between alleles appear to be the result of polymerase slippage at multiple positions in the repetitive element suggesting an intricate process of allelic evolution which is not necessarily stepwise. Complex migration scenarios must be invoked to explain the current geographic distribution of alleles if their evolution was in fact sequential (from longest to shortest or from shortest to longest) as predicted by the “progression rule”.