Sexual reproduction generates new gene combinations and novel phenotypic traits and facilitates evolution. Induction of sexual development in fungi is often regulated by environmental conditions, such as the presence of light and nutrients. The velvet protein complex coordinates internal cues and environmental signals to regulate development. We have found that VE-1, a component of the velvet complex, regulates transcription during sexual development in the fungus Neurospora crassa. VE-1 regulates the transcription of many genes, including those involved in mitogen-activated protein kinase (MAPK) signaling pathways that are essential in the regulation of sexual development, and regulates the activity of the MAPK pathway. Our findings provide valuable insights into how fungi respond to environmental signals and integrate them into their reproductive processes.