Agaricus bisporus is the model fungus for the adaptation, persistence, and growth in the humic-rich leaf-litter environment. Aside from its ecological role, A. bisporus has been an important component of the human diet for over 200 y and worldwide cultivation of the “button mushroom” forms a multibillion dollar industry. We present two A. bisporus genomes, their gene repertoires and transcript profiles on compost and during mushroom formation. The genomes encode a full repertoire of polysaccharide-degrading enzymes similar to that of wood-decayers. Comparative transcriptomics of mycelium grown on defined medium, casing-soil, and compost revealed genes encoding enzymes involved in xylan, cellulose, pectin, and protein degradation are more highly expressed in compost. The striking expansion of heme-thiolate peroxidases and beta-etherases is distinctive from Agaricomycotina wood-decayers and suggests a broad attack on decaying lignin and related metabolites found in humic acid-rich environment. Similarly, up-regulation of these genes together with a lignolytic manganese peroxidase, multiple copper radical oxidases, and cytochrome P450s is consistent with challenges posed by complex humic-rich substrates. The gene repertoire and expression of hydrolytic enzymes in A. bisporus is substantially different from the taxonomically related ectomycorrhizal symbiont Laccaria bicolor. A common promoter motif was also identified in genes very highly expressed in humic-rich substrates. These observations reveal genetic and enzymatic mechanisms governing adaptation to the humic-rich ecological niche formed during plant degradation, further defining the critical role such fungi contribute to soil structure and carbon sequestration in terrestrial ecosystems. Genome sequence will expedite mushroom breeding for improved agronomic characteristics.