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Nematode-trapping fungi (NTF) are a large and diverse group of fungi, which may switch from a saprotrophic to a predatory lifestyle if nematodes are present. Different fungi have developed different trapping devices, ranging from adhesive cells to constricting rings. After trapping, fungal hyphae penetrate the worm, secrete lytic enzymes and form a hyphal network inside the body. We sequenced the genome of Duddingtonia flagrans, a biotechnologically important NTF used to control nematode populations in fields. The 36.64 Mb genome encodes 9,927 putative proteins, among which are more than 638 predicted secreted proteins. Most secreted proteins are lytic enzymes, but more than 200 were classified as small secreted proteins (< 300 amino acids). 117 putative effector proteins were predicted, suggesting interkingdom communication during the colonization. As a first step to analyze the function of such proteins or other phenomena at the molecular level, we developed a transformation system, established the fluorescent proteins GFP and mCherry, adapted an assay to monitor protein secretion, and established gene-deletion protocols using homologous recombination or CRISPR/Cas9. One putative virulence effector protein, PefB, was transcriptionally induced during the interaction. We show that the mature protein is able to be imported into nuclei in Caenorhabditis elegans cells. In addition, we studied trap formation and show that cell-to-cell communication is required for ring closure. The availability of the genome sequence and the establishment of many molecular tools will open new avenues to studying this biotechnologically relevant nematode-trapping fungus.