Aphelids are little-known phagotrophic parasites of algae whose life cycle and morphology resemble those of the parasitic rozellids (Cryptomycota, Rozellomycota). In previous phylogenetic analyses of RNA polymerase and rRNA genes, aphelids, rozellids and Microsporidia (parasites of animals) formed a clade, named Opisthosporidia, which appeared as the sister group to Fungi. However, the statistical support for the Opisthosporidia was always moderate. Here, we generated full life-cycle transcriptome data for the aphelid species Paraphelidium tribonemae. In-depth multi-gene phylogenomic analyses using several protein datasets place this aphelid as the closest relative of fungi to the exclusion of rozellids and Microsporidia. In contrast with the comparatively reduced Rozella allomycis genome, we infer a rich, free-living-like aphelid proteome, with a metabolism similar to fungi, including cellulases likely involved in algal cell-wall penetration and enzymes involved in chitin biosynthesis. Our results suggest that fungi evolved from complex aphelid-like ancestors that lost phagotrophy and became osmotrophic.