Using next-generation sequencing (NGS), we developed and validated a whole-genome sequencing (WGS)-based clinical test for fungal species identification on clinical isolates. The identification is mainly based on the fungal ribosomal internal transcribed spacer (ITS) region as the primary marker, and additional marker and genomic analysis applied for species within the Mucorales family (using the 28S rRNA gene) and Aspergillus genus (using the beta-tubulin gene and k-mer tree-based phylogenetic clustering). The validation study involving 74 unique fungal isolates (22 yeasts, 51 molds, and 1 mushroom-forming fungus) showed high accuracy, with 100% (74/74) concordance on the genus-level identifications and 89.2% (66/74) concordance on the species level. The 8 discrepant results were due to either the limitation of conventional morphology-based methodology or taxonomic changes. After one year of implementation in our clinical laboratory, this fungal NGS test was utilized in 29 cases; the majority of them were transplant and cancer patients. We demonstrated the utility of this test by detailing five case studies, in which accurate fungal species identification led to correct diagnosis, treatment adjustment or was ruled out for hospital acquired infection. This study provides a model for validation and implementation of WGS for fungal identification in a complex health system that serves a large immunocompromised patient population.