Pathogenic fungi precisely respond to dynamic microenvironments during infection, but the underlying mechanisms are not well understood. The insect pathogenic fungus Metarhizium robertsii is a representative fungus in which to study broad themes of fungal pathogenicity as it resembles some major plant and mammalian pathogenic fungi in its pathogenesis. Here we report on a novel cascade that regulates response of M. robertsii to 2 distinct microenvironments during its pathogenesis. On the insect cuticle, the transcription factor COH2 activates expression of cuticle penetration genes. In the hemocoel, the protein COH1 is expressed due to the reduction in epigenetic repression conferred by the histone deacetylase HDAC1 and the histone 3 acetyltransferase HAT1. COH1 interacts with COH2 to reduce COH2 stability, and this down-regulates cuticle penetration genes and up-regulates genes for hemocoel colonization. Our work significantly advances the insights into fungal pathogenicity in insects.