Large chromosomal events such as translocations and segmental duplications enable rapid adaptation to new environments. Here we marshal genomic, genetic, meiotic mapping, and physical evidence to demonstrate that a chromosomal translocation and segmental duplication occurred during construction of a congenic strain pair in the fungal human pathogen Cryptococcus neoformans. Two chromosomes underwent telomere-telomere fusion, generating a dicentric chromosome that broke to produce a chromosomal translocation, forming two novel chromosomes sharing a large segmental duplication. The duplication spans 62,872 identical nucleotides and generated a second copy of 22 predicted genes, and we hypothesize that this event may have occurred during meiosis. Gene disruption studies of one embedded gene (SMG1) corroborate that this region is duplicated in an otherwise haploid genome. These findings resolve a genome project assembly anomaly and illustrate an example of rapid genome evolution in a fungal genome rich in repetitive elements.