Species within the human pathogenic Cryptococcus species complex are major threats to public health, causing approximately 1 million annual infections globally. Cryptococcus amylolentus is the most closely known related species of the pathogenic Cryptococcus species complex, and it is non-pathogenic. Additionally, while pathogenic Cryptococcus species have bipolar mating systems with a single large mating type (MAT) locus that represents a derived state in Basidiomycetes, C. amylolentus has a tetrapolar mating system with 2 MAT loci (P/R and HD) located on different chromosomes. Thus, studying C. amylolentus will shed light on the transition from tetrapolar to bipolar mating systems in the pathogenic Cryptococcus species, as well as its possible link with the origin and evolution of pathogenesis. In this study, we sequenced, assembled, and annotated the genomes of 2 C. amylolentus isolates, CBS6039 and CBS6273, which are sexual and interfertile. Genome comparison between the 2 C. amylolentus isolates identified the boundaries and the complete gene contents of the P/R and HD MAT loci. Bioinformatic and chromatin immunoprecipitation sequencing (ChIP-seq) analyses revealed that, similar to those of the pathogenic Cryptococcus species, C. amylolentus has regional centromeres (CENs) that are enriched with species-specific transposable and repetitive DNA elements. Additionally, we found that while neither the P/R nor the HD locus is physically closely linked to its centromere in C. amylolentus, and the regions between the MAT loci and their respective centromeres show overall synteny between the 2 genomes, both MAT loci exhibit genetic linkage to their respective centromere during meiosis, suggesting the presence of recombinational suppressors and/or epistatic gene interactions in the MAT-CEN intervening regions. Furthermore, genomic comparisons between C. amylolentus and related pathogenic Cryptococcus species provide evidence that multiple chromosomal rearrangements mediated by intercentromeric recombination have occurred during descent of the 2 lineages from their common ancestor. Taken together, our findings support a model in which the evolution of the bipolar mating system was initiated by an ectopic recombination event mediated by similar repetitive centromeric DNA elements shared between chromosomes. This translocation brought the P/R and HD loci onto the same chromosome, and further chromosomal rearrangements then resulted in the 2 MAT loci becoming physically linked and eventually fusing to form the single contiguous MAT locus that is now extant in the pathogenic Cryptococcus species. This manuscript explores the evolution of the genomic regions encoding the mating type loci of basidiomycetous fungi. Typically, the mating system is tetrapolar, meaning that it is composed of 2 unlinked mating type (MAT) loci (P/R and HD) that are located on different chromosomes. However, species with bipolar mating systems, in which the P/R and HD loci are located on the same chromosome, have also been identified. Tetrapolar and bipolar species are often closely related, suggesting the transition between these 2 mating systems might occur frequently. For example, the species within the human fungal pathogenic Cryptococcus species complex have bipolar mating systems, with 1 large MAT locus that appears to be a fusion product of the P/R and HD loci. On the other hand, the species that is the closest outgroup to these pathogenic species, Cryptococcus amylolentus, appears to have a classic tetrapolar mating system. Interestingly, the 2 MAT loci of C. amylolentus exhibit centromeric linkage during meiosis, and as a consequence, their resulting meiotic segregation pattern differs from other regions of the genome. Additionally, both pathogenic and non-pathogenic species are found to have large regional centromeres enriched with transposable and repetitive elements. Our genome comparison analyses indicated that these regional centromeres underwent ectopic recombination during the evolution of these 2 lineages. Based on these observations, we propose a model for the transition from the tetrapolar mating system in non-pathogenic C. amylolentus to the bipolar mating system in its related pathogenic species that is initiated by intercentromeric ectopic recombination, followed by chromosomal rearrangements. These events moved the 2 MAT loci closer to each other and eventually fused them to form a single MAT locus. This model is also consistent with recent findings on the organization of MAT loci in other basidiomycetous species.