A lichen is an association between a biotrophic fungal partner and a green algal and (or) cyanobacterial partner, which may be considered a "controlled" parasitic interaction. While controlled parasitism implies benefit to both interacting partners, a parasitism that is not controlled implies that one partner benefits to the detriment of the other partner. The objective of this study was to compare morphological development of the interaction between Cladonia rangiferina with its compatible algal partner (Asterochloris glomerata/irregularis) and incompatible algae (Coccomyxa peltigerae and Chloroidium ellipsoideum) at 3 early resynthesis stages. The fungus was co-inoculated with each alga separately and the stages of development were compared using quantitative measures. The first 3 stages of development of the lichen thallus were identified in the compatible interaction as the "pre-contact" stage (1 day post co-inoculation (PCI)), "contact" stage (8 days PCI), and "growth together" stage (21 days PCI). Compatible interactions showed significantly shorter internode length, significantly more new lateral hyphal branches, significantly greater appressorial frequency, and no reduction in cell diameter of the algal cells, compared with incompatible interactions. At 21 days PCI, a parasitic interaction was observed between Cladonia rangiferina and Chloroidium ellipsoideum. These findings support the importance of recognition between compatible partners for successful lichenization. This study also revealed a strategy that may explain the success of this species in northern habitats. Identification of the resynthesis stages of Cladonia rangiferina is required before expression of the proteins involved in recognition and defense can be understood.