Fungi are ecologically outstanding decomposers of lignocellulose. Fungal lignocellulose degradation is prominent in saprotrophic Ascomycota and Basidiomycota of the subkingdom Dikarya. Despite ascomycetes dominating the Dikarya inventory of aquatic environments, genome and transcriptome data relating to enzymes involved in lignocellulose decay remain limited to terrestrial representatives of these phyla. We sequenced the genome of an exclusively aquatic ascomycete (the aquatic hyphomycete Clavariopsis aquatica), documented the presence of genes for the modification of lignocellulose and its constituents, and compared differential gene expression between C. aquatica cultivated on lignocellulosic and sugar-rich substrates. We identified potential peroxidases, laccases, and cytochrome P450 monooxygenases, several of which were differentially expressed when experimentally grown on different substrates. Additionally, we found indications for the regulation of pathways for cellulose and hemicellulose degradation. Our results suggest that C. aquatica is able to modify lignin to some extent, detoxify aromatic lignin constituents, or both. Such characteristics would be expected to facilitate the use of carbohydrate components of lignocellulose as carbon and energy sources.