It is useful to identify and examine organisms that may prove useful for the treatment of dye-contaminated wastewater. Here, we report the purification and characterization of a new versatile peroxidase (VP) from the decolorizing microbe, Thanatephorus cucumeris Dec 1 (TcVP1). The purified TcVP1 after Mono P column chromatography showed a single band at 43 kDa on sodium dodecyl sulfate-polyacrylamide gel electrophoresis. Amino acid sequencing revealed that the N terminus of TcVP1 had the highest homology to Trametes versicolor MPG1, lignin peroxidase G (LiPG) IV, Bjerkandera adusta manganese peroxidase 1 (MnP1), and Bjerkandera sp. RBP (12 out of 14 amino acid residues, 86% identity). Mn2+ oxidizing assay revealed that TcVP1 acted like a classical MnP at pH similar to 5, while dye-decolorizing and oxidation assays of aromatic compounds revealed that the enzyme acted like a LiP at pH similar to 3. TcVP1 showed particularly high decolorizing activity toward azo dyes. Furthermore, coapplication of TcVP1 and the dye-decolorizing peroxidase (DyP) from T. cucumeris Dec 1 was able to completely decolorize a representative anthraquinone dye, Reactive blue 5, in vitro. This decolorization proceeded sequentially; DyP decolorized Reactive blue 5 to light red-brown compounds, and then TcVP1 decolorized these colored intermediates to colorless. Following extended reactions, the absorbance corresponding to the conjugated double bond from phenyl (250-300 nm) decreased, indicating that aromatic rings were also degraded. These findings provide important new insights into microbial decolorizing mechanisms and may facilitate the future development of treatment strategies for dye wastewater.