Clitopilus passeckerianus is the fungal species responsible for the production of pleuromutilin, a diterpene antibiotic that is gaining in commercial interest. Production of the antibiotic is constrained by the low titers typically obtained from isolates. We therefore set out to investigate the possibility of using classical breeding techniques coupled with genetic manipulation as a means to develop such fungi. We show that the original production strain of C. passeckerianus is able to fruit under laboratory conditions, giving viable haploid meiotic basidiospores. The derived progeny displayed the typical physiological and genetic characteristics of a tetrapolar mating system. The monokaryon haploids produced pleuromutilin and haploid lines were amenable to genetic manipulation. Together this shows that the basic requirements for a classical breeding approach are present and the tools required to undertake directed genetic engineering on haploid strains are available, demonstrating that strain improvement may be feasible in this fungus.