Most terrestrial plants form mutually beneficial symbioses with specific soil-borne fungi known as mycorrhiza. In a typical mycorrhizal association, fungal hyphae colonize plant roots, explore the soil beyond the rhizosphere and provide host plants with nutrients that might be chemically or physically inaccessible to root systems. Here, we combined nutritional, radioisotopic (33P) and genetic approaches to describe a plant growth promoting symbiosis between the basidiomycete fungus Austroboletus occidentalis and jarrah (Eucalyptus marginata), which has quite different characteristics. We show that the fungal partner does not colonize plant roots; hyphae are localized to the rhizosphere soil and vicinity and consequently do not transfer nutrients located beyond the rhizosphere. Transcript profiling of two high-affinity phosphate (Pi) transporter genes (EmPHT1;1 and EmPHT1;2) and hyphal-mediated 33Pi uptake suggest that the Pi uptake shifts from an epidermal to a hyphal pathway in ectomycorrhizal plants (Scleroderma sp.), similar to arbuscular mycorrhizal symbioses, whereas A. occidentalis benefits its host indirectly. The enhanced rhizosphere carboxylates are linked to growth and nutritional benefits in the novel symbiosis. This work is a starting point for detailed mechanistic studies on other basidiomycete-woody plant relationships, where a continuum between heterotrophic rhizosphere fungi and plant beneficial symbioses is likely to exist. © 2013 New Phytologist Trust.