Transformation is an essential tool for modern fungal research and has played a fundamental role in gaining insight into gene function. Polyethylene glycol (PEG)-mediated transformation of protoplasts is the most commonly used method for genetic transformation of filamentous fungi. Selectable marker genes, that confer resistance to antibiotics, are generally incorporated with the DNA of interest, allowing transformed cells to grow through the antibiotic overlay. Colonies arising from transformed fungal cells are sub-cultured and further analysed. However, the morphological state of the fungal cells during the transformation procedure has been largely overlooked. We investigated the morphological appearance of transformed fungal cells prior to their emergence through the antibiotic overlay. Hyphae appeared to segment and bulge, reminiscent of arthroconidia, an asexual spore typically produced by segmentation of pre-existing hyphae. Selective expression of eGFP under the control of a spore specific promoter, PcatA, in these cells confirmed their spore-like nature. Reducing the oxygen availability to surface-grown cultures partially recapitulated this morphological form. A GFP fusion to the cell wall integrity MAP kinase MpkA localised to the arthroconidia nuclei suggesting the cell wall integrity signalling pathway modulates cell wall stress responses in arthroconidia. This dramatic morphological change was also observed in transformed Magnaporthe oryzae cells suggesting it may be a more general phenomenon in filamentous fungi. Given the changes in cellular structure and spore-like appearance, these observations may have technical implications for deleting genes involved in these processes in Epichloë festucae and, more broadly, a range of fungal species.