Mycorrhizal symbiosis has been fundamental to colonization of terrestrial ecosystems by plants, influencing population dynamics, biogeography, and their evolution. The emergence of the ancient arbuscular mycorrhizal symbiosis (AMS) was followed by the diversification of alternative mycorrhizal types, including the ericoid mycorrhizae (ErM). The evolution of ErM coincides with the emergence of the Ericaceae family of angiosperms and the diversification of leafy liverworts within the order Jungermanniales, as well as their expansion into boreal and high-altitude ecosystem. Despite their evolutionary and ecological relevance, little is known about the molecular and genomic basis of ErM. Here, we sequenced the nuclear genomes of two leafy liverworts from Jungermanniales, and reconstituted ErM under laboratory conditions. We demonstrated the existence of a nutrient-regulated symbiotic state that enables ErM and underlies intracellular colonization of plant tissues. Genome and functional analyses revealed that leafy liverworts retain a conserved suite of functional genes that are required for endosymbiosis in land plants. Comparative transcriptomic analysis under ErM-permissive and restrictive conditions identified gene modules associated with endosymbiosis. Transcriptome sequencing cross-comparisons of ErM and AMS identified a conserved gene module required for the intracellular accommodation of fungal symbionts, marking it as a shared feature across diverse types of land plant symbioses. Our study presents the first genomic resources for leafy liverworts, and provides the first experimental evidence that ErM evolved from AMS. This evolutionary transition involved the co-option of a nutrient-based mechanism for the establishment of ErM, and additionally the co-option of two gene modules essential for signaling and symbiont accommodation during endosymbiosis. Our data offer valuable insights and resources for understanding the molecular basis of ErM and its diversification from AMS in land plants.