BACKGROUND: Cryptococcosis, a fatal fungal infection of the central nervous system, is one of the major killers of AIDS patients and other immunocompromised hosts. The causative agent, Cryptococcus neoformans, has a remarkable ability to 'hide' and proliferate within phagocytic cells of the human immune system. This intracellular phase is thought to underlie the ability of the pathogen to remain latent for long periods of time within infected individuals. RESULTS: We now report that Cryptococcus is able to undergo 'lateral transfer' between phagocytes, moving directly from infected to uninfected macrophages. This novel process was observed in both C. neoformans serotypes (A and D) and occurs in both immortalised cell lines and in primary human macrophages. Lateral transfer is independent of the initial route of uptake, since both serum-opsonised and antibody-opsonised C. neoformans are able to undergo direct cell-to-cell transfer. CONCLUSION: We provide the first evidence for lateral transfer of a human fungal pathogen. This rare event may occur repeatedly during latent cryptococcal infections, thereby allowing the pathogen to remain concealed from the immune system and protecting it from exposure to antifungal agents.