Pathogenic microbes confront a constant evolutionary conflict between the pressure to maintain genome stability and the need to adapt to mounting external stresses. Prokaryotes often respond with elevated mutation rates, but to date little evidence exists of stable eukaryotic hypermutators in nature.Whole genome resequencing of the human fungal pathogen Cryptococcus deuterogattii identified an outbreak lineage characterized by a nonsense mutation in MSH2. This defect in mismatch repair results in a moderate mutation rate increase in typical genes, and a larger increase in genes containing homopolymer runs. This allows facile inactivation of genes with coding homopolymer runs including FRR1, which encodes the target of the immunosuppresive antifungal drugs FK506 and rapamycin. Our study identifies a eukaryotic hypermutator lineage spread over two continents and suggests that pathogenic eukaryotic microbes may experience similar selection pressures on mutation rate as bacterial pathogens, particularly during long periods of clonal growth or while expanding into new environments.