N. crassa is notable for its use as a model organism in science because it is easy to grow and has a haploid life cycle that makes genetic analysis simple since recessive traits will show up in the offspring. Neurospora was used by Edward Tatum and George Wells Beadle in their experiments for which they won the Nobel Prize in Physiology or Medicine. Beadle and Tatum exposed N. crassa to x-rays, causing mutations. They then observed failures in metabolic pathways caused by errors in specific enzymes. This led to the "one gene, one enzyme" hypothesis that states that specific genes code for specific proteins.
In its natural environment, N. crassa lives mainly in tropical and sub-tropical regions. It can be found growing on dead plant matter after fires.