Algae and Fungi of Israel is a critical inventory of recent species diversity of lichen - forming, lichenicolous, and allied fungi found in Israel up to 2005 and includes 112 genera, 335 species, and infra-specific taxa. One hundred species are recorded for the first time for Israel. For each species, the information given provides synonyms, descriptions, data on habitat, distribution in Israel and worldwide, with references to relevant literature. A brief outline of the history of the lichenological survey of Israel is presented. A preliminary analysis of the Israeli lichen forming, lichenicolous, and allied fungal diversity is given.