Regulators of the G protein signalling (RGS) pathway have been implicated in the control of a diverse array of cellular functions, including conidiation in filamentous fungi. However, the regulatory processes involved in conidiation in insect-pathogenic fungi are poorly understood. Since conidia are the infective propagules in these fungi, an understanding of the regulatory processes involved in conidiation is essential to the development of an effective biocontrol fungus. Here, the cloning and characterization of an RGS protein gene, cag8 (conidiation-associated gene), from the insect-pathogenic fungus Metarhizium anisopliae is reported. Phylogenetic analysis showed that CAG8 was orthologous to the RGS protein FlbA from Aspergillus nidulans. Complementation of A. nidulans DeltaflbA, which cannot conidiate, with M. anisopliae cag8 restored conidiation. Gene disruption of cag8 in M. anisopliae resulted in the lack of conidia on agar plates and on infected insects, reduced mycelial growth, decreased virulence, lysis during growth in liquid medium as well as lack of pigmentation and irregularly shaped blastospores. Transcript levels of ssgA (hydrophobin-encoding gene) were markedly reduced in a Deltacag8 strain, while pr1A (subtilisin-like protease) transcription was unaffected. These results suggest that cag8 is involved in the modulation of conidiation, virulence and hydrophobin synthesis in M. anisopliae.