* The ectomycorrhizal fungus Laccaria bicolor has the largest genome of all fungi yet sequenced. The large genome size is partly a result of an expansion of gene family sizes. Among the largest gene families are protein kinases and RAS small guanosine triphosphatases (GTPases), which are key components of signal transduction pathways. * Comparative genomics and phylogenetic analyses were used to examine the evolution of the two largest families of protein kinases and RAS small GTPases in L. bicolor. Expression levels in various tissues and growth conditions were inferred from microarray data. * The two families possessed a large number of young duplicates (paralogs) that had arisen in the Laccaria lineage following the separation from the saprophyte Coprinopsis cinerea. The protein kinase paralogs were dispersed in many small clades and the majority were pseudogenes. By contrast, the RAS paralogs were found in three large groups of RAS1-, RAS2- and RHO1-like GTPases with few pseudogenes. * Duplicates of protein kinases and RAS small GTPase have either retained, gained or lost motifs found in the coding regions of their ancestors. Frequent outcomes during evolution were the formation of pseudogenes (nonfunctionalization) or proteins with novel structures and expression patterns (neofunctionalization).