Many organisms display codispersal of offspring, but fewer display codispersal of compatible gametes. This mechanism enhances the ability of a species to colonize after long distance dispersal as a mechanism of reproductive assurance, but it also fosters inbreeding and potential reduction in fitness. Here we investigated both long distance dispersal and inbreeding in the bird's nest fungus Cyathus stercoreus, a dung and mulch-associated fungus with a splash cup fruiting body appearing like a miniature bird's nest of 'eggs' or peridioles that contain thousands of mating compatible meiotic spores. To investigate the genetic structure in the species, six North American urban populations were hierarchically sampled and genotyped using 10 microsatellite markers. We detected significant levels of inbreeding through heterozygote deficiencies at four loci, with global FIS=0.061. Dispersal limitation was suggested by both spatial autocorrelation and the detection of population structure between Louisiana and Michigan using clustering and F-statistics. Although inbreeding may facilitate colonization by the fungus, it has a negative effect on the fitness of populations as estimated from a 15% reduction in growth rates of inbred strains relative to outcrossed. Mating tests revealed that C. stercoreus has a higher estimated number of mating-type alleles (MAT-A= 39, MAT-B= 24) than other species of bird's nest fungi, which would increase its outcrossing efficiency. We speculate that the increased number of mating-type alleles is the result of a recent range and population size expansion into urban environments.