This study investigated the genome ofXylaria sp. L1 and its application in assisting the degradation of okara, which is an agricultural waste. The fungus process showed that there was a 50.31% cellulose loss and 56.25% hemicellulose loss, respectively. In merely 7 days, compared with untreated control, the content of insoluble dietary fiber (IDF) in the substrate was significantly decreased by 62% whereas that of soluble dietary fiber (SDF) significantly increased by 413%. Importantly, the activity of cellulase showed a continuous increase trend and it reached the maximum activity at 11.37U/g on the 7th day. The pretreated biomass showed much higher levels of polysaccharides, especially for glucuronic acid (63.63%), than the untreated controls after 7 days. Additionally, Xylaria sp. L1 sporocarps had higher quantities of macronutrients, especially for Zn. Furthermore, we conducted the first annotation of Xylaria sp. L1 genome. Illumina and nanopore sequencing revealed that the genome size of Xylaria sp. L1 was 36.61 Mb. The high activity of cellulase was in accordance with the annotation the Gene Ontology (GO), Kyoto Encyclopedia of Genes and Genomes (KEGG), Eukaryotic Orthologous Groups (KOG), and carbohydrate-active enzymes (CAZy) databases, which are related to cellulose and hemicellulose degradation. GHs were the most abundant enzymes and 203 genes were annotated to GHs. Cellulose and hemicellulose decomposition was likely performed by an expressed GH43 and GH5 protein families containing their binding domains and genes A0779, A0819, A7717 played an important role in pentose and glucuronate interconversions. Therefore, the higher IDF decomposition by Xylaria sp. L1 makes it a prospective feedstock for okara degradation.