Morphogenesis of filamentous ascomycetes includes continuously elongating hyphae, frequently emerging lateral branches, and, under certain circumstances, symmetrically dividing hyphal tips. We identified the formin AgBni1p of the model fungus Ashbya gossypii as an essential factor in these processes. AgBni1p is an essential protein apparently lacking functional overlaps with the two additional A. gossypii formins that are nonessential. Agbni1 null mutants fail to develop hyphae and instead expand to potato-shaped giant cells, which lack actin cables and thus tip-directed transport of secretory vesicles. Consistent with the essential role in hyphal development, AgBni1p locates to tips, but not to septa. The presence of a diaphanous autoregulatory domain (DAD) indicates that the activation of AgBni1p depends on Rho-type GTPases. Deletion of this domain, which should render AgBni1p constitutively active, completely changes the branching pattern of young hyphae. New axes of polarity are no longer established subapically (lateral branching) but by symmetric divisions of hyphal tips (tip splitting). In wild-type hyphae, tip splitting is induced much later and only at much higher elongation speed. When GTP-locked Rho-type GTPases were tested, only the young hyphae with mutated AgCdc42p split at their tips, similar to the DAD deletion mutant. Two-hybrid experiments confirmed that AgBni1p interacts with GTP-bound AgCdc42p. These data suggest a pathway for transforming one axis into two new axes of polar growth, in which an increased activation of AgBni1p by a pulse of activated AgCdc42p stimulates additional actin cable formation and tip-directed vesicle transport, thus enlarging and ultimately splitting the polarity site.