There is an increasing interest in microbial biological systems, the competition or cooperation within, and ensuing natural products that may be produced or suppressed. The focus of this work was to understand the role and regulation of basidiomycete natural products in co-cultures. Ecologically relevant model basidiomycetes like Serpula lacrymans and Paxillus involutus, whose genomes contain an unusually high number of yet to be characterized natural product genes, are ideal for such studies. Because basidiomycetes have not been extensively studied in this regard, our main objective was to shed new light into such basidiomycete biotic interactions and the ensuing natural products. We found that at least 13 different bacteria stimulated the production of atromentin-derived pigments (e.g. variegatic acid) in the brown-rotter Serpula lacrymans. Correspondingly, the atromentin gene cluster was induced. Pigment induction by bacteria was not observed in the taxonomically related, but mycorrhizae-forming fungus, Paxillus involutus. Enzymatic, but not mechanical, damage to S. lacrymans induced pigmentation. Congruently, protease-inhibited Bacillus subtilis did not cause pigment induction. Variegatic acid from S. lacrymans inhibited the movement of B. subtilis but did not kill the bacterium. In silico work showed that the promoter motifs preceding key atromentin biosynthesis genes were found highly conserved in basidiomycetes, while certain motifs varied depending on lifestyle (brown-rotter vs. mycorrhizae). RNA-sequencing data from S. lacrymans - B. subtilis co-cultures provided additional insight into other simultaneously up-regulated genes that are involved in natural product biosynthesis, iron movement and stress. Lastly, Raman spectroscopy was applied to facilitate the study of pigment induction in various multi-partner cultures by non-destructively fingerprinting compounds in the interaction zone. Putatively new pigments were then preliminarily described. This work provided the first experimental evidence that a basidiomycete natural product gene cluster was inducible and co-regulated during trans-kingdom co-incubations. The combined results set the stage to study unexplored basidiomycete natural product regulatory processes using the atromentin gene cluster as a model.