Polyporus umbellatus is one of the most widely used and precious medicinal fungi and the underground sclerotia are known to be with great medicinal value. However, the molecular mechanisms involved in sclerotial development are poorly understood. In the present study, we constructed a forward suppression subtractive hybridization (SSH) cDNA library of Polyporus umbellatus to identify genes expressing differently between mycelium and sclerotia. In this library, a total of 1202 clones were sequenced, assembled into 222 contigs and 524 singletons which were further searched against the NCBI nonredundant (NR) protein database (E-value cutoff, 10(-5)). Based on sequence similarity with known proteins, 378 sequences between mycelium and sclerotial were identified and classified into different functional categories through Gene Ontology (GO), Clusters of orthologous Groups of proteins (COGs). We have finally identified a majority of differentially expressed genes (constituting 5.6% of the present library) between the two different periods. An expression level of 32 selected expressed sequence tags (ESTs) generated from the above SSH cDNA library was studied through RT-PCR. This study provides the first global overview of genes putatively involved in Polyporus umbellatus sclerotial development and provides a preliminary basis for further functional research in terms of regulated gene expression in sclerotial production.