Microorganisms evolve via a range of mechanisms that may include or involve sexual/parasexual reproduction, mutators, aneuploidy, Hsp90 and even prions. Mechanisms that may seem detrimental can be repurposed to generate diversity. Here we show that the human fungal pathogen Mucor circinelloides develops spontaneous resistance to the antifungal drug FK506 (tacrolimus) via two distinct mechanisms. One involves Mendelian mutations that confer stable drug resistance; the other occurs via an epigenetic RNA interference (RNAi)-mediated pathway resulting in unstable drug resistance. The peptidylprolyl isomerase FKBP12 interacts with FK506 forming a complex that inhibits the protein phosphatase calcineurin(1). Calcineurin inhibition by FK506 blocks M. circinelloides transition to hyphae and enforces yeast growth(2). Mutations in the fkbA gene encoding FKBP12 or the calcineurin cnbR or cnaA genes confer FK506 resistance and restore hyphal growth. In parallel, RNAi is spontaneously triggered to silence the fkbA gene, giving rise to drug-resistant epimutants. FK506-resistant epimutants readily reverted to the drug-sensitive wild-type phenotype when grown without exposure to the drug. The establishment of these epimutants is accompanied by generation of abundant fkbA small RNAs and requires the RNAi pathway as well as other factors that constrain or reverse the epimutant state. Silencing involves the generation of a double-stranded RNA trigger intermediate using the fkbA mature mRNA as a template to produce antisense fkbA RNA. This study uncovers a novel epigenetic RNAi-based epimutation mechanism controlling phenotypic plasticity, with possible implications for antimicrobial drug resistance and RNAi-regulatory mechanisms in fungi and other eukaryotes.