Peanut seed is ideally stored at low water activity (aw) and low temperature, since common mycotoxigenic fungi cannot survive below 0.8 aw, and the life cycle of seed-infesting insects is interrupted below 15 °C. Hermetic storage bags at 0.77 aw, room temperature, and ≥ 9000 mg/m3 CO2, were tested for their potential use in countries where temperature control is unaffordable. Despite these inhospitable conditions, peanuts displayed an unusual white powder that we identified as the xerophilic fungus Xerochrysium xerophilum (syn. Chrysosporium xerophilum), and sequenced its genome. Previously, only 19 sequences shorter than 1700 nt were available. For six decades, only three food sources of X. xerophilum were known: dry prunes, chocolate, and dry coconut. Here we report peanut as a novel food source of this extremophile and make one isolate available at the USDA culture collection. Given the slow growth of this fungus in culture, we developed a robust PCR to sequence and identify X. xerophilum on contaminated peanut seed without performing DNA extraction. The broad range of oxygen, aw and temperatures that support growth of X. xerophilum will significantly affect the decisions made regarding the conditions to safely store peanuts.