The mushroom Agrocybe aegerita secretes a peroxidase (AaP) that catalyzes halogenations and hydroxylations. Phenol was brominated to 2- and 4-bromophenol (ratio 1:4) and chlorinated to a lesser extent to 2-chlorophenol. The purified enzyme was found to oxidize toluene via benzyl alcohol and benzaldehyde into benzoic acid. A second fraction of toluene was hydroxylated to give p-cresol as well as o-cresol and methyl-p-benzoquinone. The UV-Vis absorption spectrum of purified AaP showed high similarity to a resting state cytochrome P450 with the Soret band at 420 nm and additional maxima at 278, 358, 541 and 571 nm; the AaP CO-complex had a distinct absorption maximum at 445 nm that is characteristic for heme-thiolate proteins. AaP regioselectively hydroxylated naphthalene to 1-naphthol and traces of 2-naphthol (ratio 36:1). H2O2 was necessarily required for AaP function and hence the hydroxylations catalyzed by AaP can be designated as peroxygenation and the enzyme as an extracellular peroxygenase.