Sclerotinia sclerotiorum is a fungal plant pathogen and the causal agent of lettuce drop, an economically important disease of California lettuce. The structure of the S. sclerotiorum mating type locus MAT has previously been reported and consists of two idiomorphs that are fused end-to-end as in other homothallics. We investigated the diversity of S. sclerotiorum MAT using a total of 283 isolates from multiple hosts and locations, and identified a novel MAT allele that differed by a 3.6-kb inversion and was designated Inv+, as opposed to the previously known S. sclerotiorum MAT that lacked the inversion and was Inv-. The inversion affected three of the four MAT genes: MAT1-2-1 and MAT1-2-4 were inverted and MAT1-1-1 was truncated at the 3'-end. Expression of MAT genes differed between Inv+ and Inv- isolates. In Inv+ isolates, only one of the three MAT1-2-1 transcript variants of Inv- isolates was detected, and the alpha1 domain of Inv+ MAT1-1-1 transcripts was truncated. Both Inv- and Inv+ isolates were self-fertile, and the inversion segregated in a 1∶1 ratio regardless of whether the parent was Inv- or Inv+. This suggested the involvement of a highly regulated process in maintaining equal proportions of Inv- and Inv+, likely associated with the sexual state. The MAT inversion region, defined as the 3.6-kb MAT inversion in Inv+ isolates and the homologous region of Inv- isolates, was flanked by a 250-bp inverted repeat on either side. The 250-bp inverted repeat was a partial MAT1-1-1 that through mediation of loop formation and crossing over, may be involved in the inversion process. Inv+ isolates were widespread, and in California and Nebraska constituted half of the isolates examined. We speculate that a similar inversion region may be involved in mating type switching in the filamentous ascomycetes Chromocrea spinulosa, Sclerotinia trifoliorum and in certain Ceratocystis species.