Bursts of diversification are known to have contributed significantly to the extant morphological and species diversity, but evidence for many of the theoretical predictions about adaptive radiations have remained contentious. Despite their tremendous diversity, patterns of evolutionary diversification and the contribution of explosive episodes in fungi are largely unknown. Here, using the genus Coprinellus (Psathyrellaceae, Agaricales) as a model, we report the first explosive fungal radiation and infer that the onset of the radiation correlates with a change from a multilayered to a much simpler defense structure on the fruiting bodies. We hypothesize that this change constitutes a key innovation, probably relaxing constraints on diversification imposed by nutritional investment into the development of protective tissues of fruiting bodies. Fossil calibration suggests that Coprinellus mushrooms radiated during the Miocene coinciding with global radiation of large grazing mammals following expansion of dry open grasslands. In addition to diversification rate-based methods, we test the hard polytomy hypothesis, by analyzing the resolvability of internal nodes of the backbone of the putative radiation using Reversible-Jump MCMC. We discuss potential applications and pitfalls of this approach as well as how biologically meaningful polytomies can be distinguished from alignment shortcomings. Our data provide insights into the nature of adaptive radiations in general by revealing a deceleration of morphological diversification through time. The dynamics of morphological diversification was approximated by obtaining the temporal distribution of state changes in discrete traits along the trees and comparing it with the tempo of lineage accumulation. We found that the number of state changes correlate with the number of lineages, even in parts of the tree with short internal branches, and peaks around the onset of the explosive radiation followed by a slowdown, most likely because of the decrease in available niches.