Candida albicans is a major opportunistic pathogen of humans. It can grow as morphologically distinct yeast, pseudohyphae and hyphae, and the ability to switch reversibly among different forms is critical for its virulence. The relationship between morphogenesis and innate immune recognition is not quite clear. Dectin-1 is a major C-type lectin receptor that recognizes β-glucan in the fungal cell wall. C. albicans β-glucan is usually masked by the outer mannan layer of the cell wall. Whether and how β-glucan masking is differentially regulated during hyphal morphogenesis is not fully understood. Here we show that the endo-1,3-glucanase Eng1 is differentially expressed in yeast, and together with Yeast Wall Protein 1 (Ywp1), regulates β-glucan exposure and Dectin-1-dependent immune activation of macrophage by yeast cells. ENG1 deletion results in enhanced Dectin-1 binding at the septa of yeast cells; while eng1 ywp1 yeast cells show strong overall Dectin-1 binding similar to hyphae of wild-type and eng1 mutants. Correlatively, hyphae of wild-type and eng1 induced similar levels of cytokines in macrophage. ENG1 expression and Eng1-mediated β-glucan trimming are also regulated by antifungal drugs, lactate and N-acetylglucosamine. Deletion of ENG1 modulates virulence in the mouse model of hematogenously disseminated candidiasis in a Dectin-1-dependent manner. The eng1 mutant exhibited attenuated lethality in male mice, but enhanced lethality in female mice, which was associated with a stronger renal immune response and lower fungal burden. Thus, Eng1-regulated β-glucan exposure in yeast cells modulates the balance between immune protection and immunopathogenesis during disseminated candidiasis.