Fifty isolates of Cryptococcus neoformans were examined for extracellular phospholipase production after inoculation onto egg yolk agar; 49 produced a pericolonial precipitate indicative of phospholipase activity. Phospholipase B (PLB), lysophospholipase, and lysophospholipase-transacylase activities were identified by radiometric analysis in supernatants from 4 clinical isolates. The ratio of colony diameter to colony plus precipitate on agar (Pz) correlated with PLB activity. Phospholipase production was similar in 12 environmental and 13 clinical isolates of C. neoformans var. gattii. Environmental strains of C. neoformans var. neoformans (n = 8) produced more phospholipase at 72 h than did 17 clinical isolates (mean Pz, 0.57 vs. 0.72; P < .01); however, Pz values were similar at 96 h. Quantitation of cryptococci in the lungs and brains of BALB/c mice inoculated intravenously with 4 strains expressing high, intermediate, or low phospholipase activity revealed a correlation between phospholipase activity and virulence. Phospholipases secreted by C. neoformans may be implicated in virulence.