In spite of its prevalence in animals and plants, endogenous nitric oxide (NO) has been rarely reported in fungi. We present here our observations on production of intracellular NO and its possible roles during development of Neurospora crassa, a model filamentous fungus. Intracellular NO was detected in hypha 8-16 hours after incubation in Vogel's minimal liquid media and conidiophores during conidiation using a fluorescent indicator (DAF-FM diacetate). Treatment with cPTIO, an NO scavenger, significantly reduced fluorescence levels and hindered hyphal growth in liquid media and conidiation, whereas exogenous NO enhanced hyphal extension on VM agar media and conidia formation. NO scavenging also dramatically diminished transcription of con-10 and con-13, genes preferentially expressed during conidiation. Our results suggest that intracellular NO is generated in young hypha growing in submerged culture and during conidia development and regulate mycelial development and conidia formation.