Homobasidiomycetes display a variety of fruit body morphologies. Examples include gilled mushrooms, coral fungi, polypores and puffballs but also species with simple crust-like basidiomata, usually called corticioid fungi. The latter group has largely been neglected in recent studies of homobasidiomycete evolution. The major goal of the present study was to explore the impact that the addition of a wide selection of species with crust-like basidiomata would have on homobasidiomycete phylogeny. Two genes, 5.8S and 28S in the nuclear rDNA repeats, were sequenced and a data set with 178 taxa analysed using neighbour-joining and maximum parsimony methods. Support for clades was evaluated by bootstrap. Basal nodes generally received weak support and branching order for major clades remained largely unresolved. Twelve major groups were recovered and corticioid fungi make up a major or important constituent in most of them. Nine groups are strongly supported but support for euagarics and polyporoid clades is poor. Phlebioid fungi were in earlier studies merged with the polyporoid clade but are here identified as a separate clade. Athelia is allied with ectomycorrhizal genera, inter alia Piloderma and Amphinema, in a separate clade forming a sister group to the boletes. We conclude that corticioid fungi hold a considerable share of the phylogenetic diversity displayed by homobasidiomycetes, and should always be considered when phylogenetic studies of larger basidiomycetes are designed.