Degradation of lignin by fungi enhances availability of cellulose and hemicellulose in plant waste and thereby increases the amount of carbon source available to these microorganisms. The button mushroom Agaricus bisporus degrades only about half of the lignin in compost and about 40% of the carbohydrates remain unutilized during mushroom cultivation. Here it was assessed whether over-expression of the manganese peroxidase gene mnp1 improves lignin degradation and, as a consequence, carbohydrate breakdown by A. bisporus. Transformants expressing mnp1 under the control of actin regulatory sequences produced MnP activity in malt extract medium, while the parental strain A15 did not. MnP activity was increased 0.3- and 3-fold at casing and after the 2nd flush of a semi-commercial cultivation, respectively, when compared to strain A15. Pyrolysis-GC-MS showed that overexpression of MnP decreased phenylmethane and phenylethane type lignin relative to the phenylpropane type after the 2nd flush. However, it neither affected the syringyl/guaiacyl derived residue ratio nor the ratio of oxidized to non-oxidized lignin residues. Moreover, the carbohydrate content and accessibility was not affected in compost. Notably, the capacity of compost extract to consume the MnP co-factor H2O2 was 4- to 8-fold higher than its production. This may well explain why over-expression of mnp1 did not improve carbohydrate degradation in compost. In fact, availability of H2O2 may limit lignin degradation by wild-type A. bisporus.