Homobasidiomycetes include the majority of wood-decaying fungi. Two basic forms of wood decay are known in homobasidiomycetes: white rot, in which lignin and cellulose are degraded, and brown rot, in which lignin is not appreciably degraded. An apparent correlation has been noted between production of a brown rot, decay of conifer substrates, and possession of a bipolar mating system (which has a single mating type locus, vs. tetrapolar systems, which have two mating type loci). The goals of this study were to infer the historical pattern of transformations in decay mode, mating type, and substrate range characters, and to determine if a causal relationship exists among them. We performed a phylogenetic analysis of 130 species of homobasidiomycetes using nuclear and mitochondrial rDNA sequences, and performed ancestral state reconstructions using parsimony on a range of trees, with various loss:gain cost ratios. We evaluated pairwise character correlations using the concentrated changes test (CCT) of Maddison and the maximum likelihood (ML) method of Pagel. White rot, tetrapolar mating systems, and the ability to decay conifers and hardwoods appear to be plesiomorphic in homobasidiomycetes, whereas brown rot, bipolar mating systems, and exclusive decay of conifers appear to have evolved repeatedly. The only significant correlation among characters was that between brown rot (as the independent character) and exclusive decay of conifer substrates. This correlation was supported by the CCT on a range of plausible trees, although not with every reconstruction of ancestral states, and the ML test. Our findings suggest that the evolution of brown rot has promoted repeated shifts to specialization for conifer substrates.