Bio-degradation is the most affordable method of azo dye decontamination, while its drawbacks such as aromatic amines accumulation and low degradation efficiency must be overcome. In this study, a novel mechanism of azo dye degradation by a fungus was discovered. At a concentration of 400 mg/L, the decolorization efficiency of Acid Red 73 (AR73) by Aspergillus tabacinus LZ-M was 90.28%. Metabolite analysis and transcriptome sequencing analysis revealed a self-redox process of AR73 degradation, where the electrons generated in carbon oxidation were transferred to the reduction of -C-N = and –NN. The metabolites, 2-hydroxynaphthalene and N-phenylnitrous amide were mineralized into CO2 through catechol pathway and a glycolytic process. Furthermore, the mineralization ratio of dye was computed to be 31.8% by the carbon balance and electron balance. By using comparative transcriptome, a novel decoloring enzyme Ord95 was discovered in unknown genes through gene cloning. It hydrolyzed AR73 into 2-hydroxynaphthalene and N-phenylnitrous amide, containing a glutathione S-transferase domain with three arginines as key active sites. Here the new mechanism of azo dye degradation was discovered with identification of a novel enzyme in Aspergillus tabacinus LZ-M.