Many microorganisms with specialized lifestyles have reduced genomes. This is best understood in beneficial bacterial symbioses, where partner fidelity facilitates loss of genes necessary for living independently. Specialized microbial pathogens may also exhibit gene loss relative to generalists. Here, we demonstrate that Escovopsis weberi, a fungal parasite of the crops of fungus-growing ants, has a reduced genome in terms of both size and gene content relative to closely related but less specialized fungi. Although primary metabolism genes have been retained, the E. weberi genome is depleted in carbohydrate active enzymes, which is consistent with reliance on a host with these functions. E. weberi has also lost genes considered necessary for sexual reproduction. Contrasting these losses, the genome encodes unique secondary metabolite biosynthesis clusters, some of which include genes that exhibit up-regulated expression during host attack. Thus, the specialized nature of the interaction between Escovopsis and ant agriculture is reflected in the parasite's genome.