Ganoderma lucidum is a widely used medicinal macrofungus in traditional Chinese medicine that creates a diverse set of bioactive compounds. Here we report its 43.3-Mb genome, encoding 16,113 predicted genes, obtained using next-generation sequencing and optical mapping approaches. The sequence analysis reveals an impressive array of genes encoding cytochrome P450s (CYPs), transporters and regulatory proteins that cooperate in secondary metabolism. The genome also encodes one of the richest sets of wood degradation enzymes among all of the sequenced basidiomycetes. In all, 24 physical CYP gene clusters are identified. Moreover, 78 CYP genes are coexpressed with lanosterol synthase, and 16 of these show high similarity to fungal CYPs that specifically hydroxylate testosterone, suggesting their possible roles in triterpenoid biosynthesis. The elucidation of the G. lucidum genome makes this organism a potential model system for the study of secondary metabolic pathways and their regulation in medicinal fungi.