Two-component signaling systems are widespread in bacteria, but also found in fungi. In this study, we have characterized TcsC, the only Group III two-component sensor kinase of Aspergillus fumigatus. TcsC is required for growth under hyperosmotic stress, but dispensable for normal growth, sporulation and conidial viability. A characteristic feature of the ΔtcsC mutant is its resistance to certain fungicides, like fludioxonil. Both hyperosmotic stress and treatment with fludioxonil result in a TcsC-dependent phosphorylation of SakA, the final MAP kinase in the high osmolarity glycerol (HOG) pathway, confirming a role for TcsC in this signaling pathway. In wild type cells fludioxonil induces a TcsC-dependent swelling and a complete, but reversible block of growth and cytokinesis. Several types of stress, such as hypoxia, exposure to farnesol or elevated concentrations of certain divalent cations, trigger a differentiation in A. fumigatus toward a "fluffy" growth phenotype resulting in white, dome-shaped colonies. The ΔtcsC mutant is clearly more susceptible to these morphogenetic changes suggesting that TcsC normally antagonizes this process. Although TcsC plays a role in the adaptation of A. fumigatus to hypoxia, it seems to be dispensable for virulence.