Development of multicellularity was one of the major transitions in evolution and occurred independently multiple times in algae, plants, animals, and fungi. However recent comparative genome analyses suggest that fungi followed a different route to other eukaryotic lineages. To understand the driving forces behind the transition from unicellular fungi to hyphal forms of growth, we develop a comparative model of osmotrophic resource acquisition. This predicts that whenever the local resource is immobile, hard-to-digest, and nutrient poor, hyphal osmotrophs outcompete motile or autolytic unicellular osmotrophs. This hyphal advantage arises because transporting nutrients via a contiguous cytoplasm enables continued exploitation of remaining resources after local depletion of essential nutrients, and more efficient use of costly exoenzymes. The model provides a mechanistic explanation for the origins of multicellular hyphal organisms, and explains why fungi, rather than unicellular bacteria, evolved to dominate decay of recalcitrant, nutrient poor substrates such as leaf litter or wood.