Rhinocladiella mackenziei accounts for the majority of fungal brain infections in the Middle East, and is restricted to the arid climate zone between Saudi Arabia and Pakistan. Neurotropic dissemination caused by this fungus has been reported in immunocompromised, but also immunocompetent individuals. If untreated, the infection is fatal. Outside of humans, the environmental niche of R. mackenziei is unknown, and the fungus has been only cultured from brain biopsies. In this paper, we describe the whole-genome resequencing of two R. mackenziei strains from patients in Saudi Arabia and Qatar. We assessed intraspecies variation and genetic signatures to uncover the genomic basis of the pathogenesis, and potential niche adaptations. We found that the duplicated genes (paralogs) are more susceptible to accumulating significant mutations. Comparative genomics with other filamentous ascomycetes revealed a diverse arsenal of genes likely engaged in pathogenicity, such as the degradation of aromatic compounds and iron acquisition. In addition, intracellular accumulation of trehalose and choline suggests possible adaptations to the conditions of an arid climate region. Specifically, protein family contractions were found, including short-chain dehydrogenase/reductase SDR, the cytochrome P450 (CYP) (E-class), and the G-protein β WD-40 repeat. Gene composition and metabolic potential indicate extremotolerance and hydrocarbon assimilation, suggesting a possible environmental habitat of oil-polluted desert soil.