Stable isotope analysis is a major tool used in ecosystem studies to establish pathways and rates of C exchange between various ecosystem components. Little is known about isotopic effects of many such components, especially microbes. Here we report on the discovery of an unexpected pattern of C isotopic discrimination by basidiomycete fungi with far-reaching consequences for our understanding of isotopic processing in ecosystems where these microbes mediate material transfers across trophic levels. We measured fractionation effects on three ecologically relevant basidiomycete species under controlled laboratory conditions. Sucrose derived from C 3 and C 4 plants is fractionated differentially by these microbes in a taxon-specific manner. The differentiation between mycorrhizal and saprotrophic fungi observed in the field by others is not explained by intrinsic discrimination patterns. Fractionation occurs during sugar uptake and is sensitive to the nonrandom distribution of stable isotopes in the sucrose molecule. The balance between respiratory physiology and fermentative physiology modulates the degree of fractionation. These discoveries disprove the assumption that fungal C processing does not significantly alter the distribution of stable C isotopes and provide the basis for a reevaluation of ecosystem models based on isotopic evidence that involve C transfer across microbial interfaces. We provide a mechanism to account for the observed differential discrimination effects.In the last decade, the analysis of stable C isotopes has emerged as a major tool to trace and quantify C transfers across trophic levels in a variety of ecosystems (10, 21, 28). Two major premises concerning stable C isotopes in the environment are frequently assumed. First, it is known that the mechanism of CO 2 uptake from the atmosphere and incorporation of CO 2 into plant organic matter through photosynthesis result in characteristic isotopic ratios, which distinguish C 3 plants from C 4 plants (37). Second, it is frequently assumed that the effects of other biological transformations on the natural distribution of stable C isotopes are relatively insignificant compared to the photosynthesis-determined isotopic discrimination (17,18,41,42). These two assumptions are at the core of isotope-based models of ecosystem function and global nutrient cycling.While much refinement in knowledge has occurred with respect to photosynthetic pathways under various ecological conditions (11, 37), other equally important processes, such as decomposition, have remained mostly unexplored with respect to their isotopic discrimination effects, although they are critical for understanding ecosystem C flows. Previous studies have shown that microbial metabolic processes can be associated with characteristic fractionation patterns at the subcellular scale (1, 7), but the discrimination effects are often masked at the whole-organism level, resulting in the assumption that, overall, C isotopic discrimination due to microbial processing is not significant (Ͻ1...