Aromatic peroxygenases are extracellular fungal biocatalysts that selectively oxidize a variety of organic compounds. We found that the peroxygenase of the fungus Agrocybe aegerita (AaeAPO) catalyzes the H2O2-dependent hydroxylation of diverse flavonoids. The reactions proceeded rapidly and regioselectively yielding preferentially monohydroxylated products, e.g., from flavanone, apigenin, luteolin, flavone as well as daidzein, quercetin, kaempferol, and genistein. In addition to hydroxylation, O-demethylation of fully methoxylated tangeretin was catalyzed by AaeAPO. The enzyme was merely lacking activity on the quercetin glycoside rutin, maybe due to sterical hindrance by the bulky sugar substituents. Mechanistic studies indicated the presence of epoxide intermediates during hydroxylation and incorporation of H2O2-derived oxygen into the reaction products. Our results raise the possibility that fungal peroxygenases may be useful for versatile, cost-effective, and scalable syntheses of flavonoid metabolites.