Ustilago hordei is a biotrophic parasite of barley (Hordeum vulgare). After seedling infection, the fungus persists in the plant until head emergence when fungal spores develop and are released from sori formed at kernel positions. The 26.1-Mb U. hordei genome contains 7113 protein encoding genes with high synteny to the smaller genomes of the related, maize-infecting smut fungi Ustilago maydis and Sporisorium reilianum but has a larger repeat content that affected genome evolution at important loci, including mating-type and effector loci. The U. hordei genome encodes components involved in RNA interference and heterochromatin formation, normally involved in genome defense, that are lacking in the U. maydis genome due to clean excision events. These excision events were possibly a result of former presence of repetitive DNA and of an efficient homologous recombination system in U. maydis. We found evidence of repeat-induced point mutations in the genome of U. hordei, indicating that smut fungi use different strategies to counteract the deleterious effects of repetitive DNA. The complement of U. hordei effector genes is comparable to the other two smuts but reveals differences in family expansion and clustering. The availability of the genome sequence will facilitate the identification of genes responsible for virulence and evolution of smut fungi on their respective hosts.