<p>Deadwood is a major carbon source in forests, and yet the fate of this carbon remains a gap in our understanding of global carbon cycling. Lignin, the most recalcitrant biopolymer in wood, is mainly decayed through extracellular enzymatic and chemical processes initiated by white-rot fungi. However, the intracellular conversion of lignin decay products has been overlooked in the fungal kingdom. Here we integrate comparative genomic and phylogenetic analyses to understand the distribution and evolution of enzymes responsible for modifying lignin-related aromatic compounds—such as decarboxylases, hydroxylases, dioxygenases and other downstream ring-cleavage enzymes—that funnel carbon to central metabolism across the bacterial and the fungal kingdoms. We demonstrate that specific fungal lineages conserve these enzyme families, and that the abilities to enzymatically depolymerize lignin and catabolize lignin-related aromatic compounds are not necessarily coupled. Our analyses also reveal an expanded substrate specificity of aromatic ring-cleavage enzymes during fungal evolution, as well as a clade of extracellular enzymes among them, broadening the spatial range of these biochemical capabilities. Together, our results highlight a large diversity of fungal enzymes and hosts that warrant further investigation for inclusion into carbon cycling models and biotechnological applications for the conversion of aromatic compounds.</p>