Many litter-decay fungi secrete heme-thiolate peroxygenases that oxidize various organic chemicals, but little is known about the role or mechanism of these enzymes. We found that the extracellular peroxygenase of Agrocybe aegerita catalyzed the H2O2-dependent cleavage of environmentally significant ethers, including methyl t-butyl ether, tetrahydrofuran, and 1,4-dioxane. Experiments with tetrahydrofuran showed the reaction was a two-electron oxidation that generated one aldehyde group and one alcohol group, yielding the ring-opened product 4-hydroxybutanal. Investigations with several model substrates provided information about the route for ether cleavage: (a) steady-state kinetics results with methyl 3,4-dimethoxybenzyl ether, which was oxidized to 3,4-dimethoxybenzaldehyde, gave parallel double reciprocal plots suggestive of a ping-pong mechanism (K(m)((peroxide)), 1.99 +/- 0.25 mM; K(m)((ether)), 1.43 +/- 0.23 mM; k(cat), 720 +/- 87 s(-1)), (b) the cleavage of methyl 4-nitrobenzyl ether in the presence of H2(18)O2 resulted in incorporation of 18O into the carbonyl group of the resulting 4-nitrobenzaldehyde, and (c) the demethylation of 1-methoxy-4-trideuteromethoxybenzene showed an observed intramolecular deuterium isotope effect [(k(H)/k(D))(obs)] of 11.9 +/- 0.4. These results suggest a hydrogen abstraction and oxygen rebound mechanism that oxidizes ethers to hemiacetals, which subsequently hydrolyze. The peroxygenase appeared to lack activity on macromolecular ethers, but otherwise exhibited a broad substrate range. It may accordingly have a role in the biodegradation of natural and anthropogenic low molecular weight ethers in soils and plant litter.