Fungal dye-decolorizing peroxidases (DyPs) have found applications in the treatment of dye-contaminated industrial wastes or to improve biomass digestibility. Their roles in fungal biology are uncertain, although it has been repeatedly suggested that they could participate in lignin degradation and/or modification. Using a comprehensive set of 162 fully sequenced fungal species, we defined seven distinct fungal DyP clades on basis of a sequence similarity network. Sequences from one of these clades clearly diverged from all others, having on average the lower isoelectric points and hydropathy indices, the highest number of N-glycosylation sites, and N-terminal sequence peptides for secretion. Putative proteins from this clade are absent from brown-rot and ectomycorrhizal species that have lost the capability of degrading lignin enzymatically. They are almost exclusively present in white-rot and other saprotrophic Basidiomycota that digest lignin enzymatically, thus lending support for a specific role of DyPs from this clade in biochemical lignin modification. Additional nearly full-length fungal DyP genes were isolated from the environment by sequence capture by hybridization; they all belonged to the clade of the presumably secreted DyPs and to another related clade. We suggest focusing our attention on the presumably intracellular DyPs from the other clades, which have not been characterized thus far and could represent enzyme proteins with novel catalytic properties. KEY POINTS: • A fungal DyP phylogeny delineates seven main sequence clades. • Putative extracellular DyPs form a single clade of Basidiomycota sequences. • Extracellular DyPs are associated to white-rot fungi.