Fungi are crucial components of modern ecosystems. They may have had an important role in the colonization of land by eukaryotes, and in the appearance and success of land plants and metazoans1-3. Nevertheless, fossils that can unambiguously be identified as fungi are absent from the fossil record until the middle of the Palaeozoic era4,5. Here we show, using morphological, ultrastructural and spectroscopic analyses, that multicellular organic-walled microfossils preserved in shale of the Grassy Bay Formation (Shaler Supergroup, Arctic Canada), which dates to approximately 1,010-890 million years ago, have a fungal affinity. These microfossils are more than half a billion years older than previously reported unambiguous occurrences of fungi, a date which is consistent with data from molecular clocks for the emergence of this clade6,7. In extending the fossil record of the fungi, this finding also pushes back the minimum date for the appearance of eukaryotic crown group Opisthokonta, which comprises metazoans, fungi and their protist relatives8,9.