This study investigates the hepatoprotective effect of a water-alcohol extract of the medicinal mushroom Phellinus caryophylli (Racib.) G. Cunn. (PCE) against acetaminophen (APAP)-induced hepatotoxicity in Swiss albino mice. The mice orally received APAP (150 mg/kg body weight), followed by PCE extract (250 or 500 mg/kg body weight). The liver damage induced by APAP was analyzed on the basis of blood serum parameters (glutamate pyruvate transaminase, glutamate oxaloacetate transaminase, and alkaline phosphatase), antioxidant assays (reduced glutathione and glutathione peroxidase), and tissue peroxidation based on malondialdehyde level. The molecular mechanism underlying the prevention of APAP-induced damage by PCE was also analyzed. Liver damage was confirmed on the basis of increased serum parameter values, decreased antioxidant levels, and cellular and molecular alterations, which PCE restored in a dose-dependent manner. At a transcriptional level, PCE downregulated expression of the preapoptototic gene Bax and the inflammatory gene Cox2 but upregulated the antiapoptotic gene Bcl2 in the mice that received APAP. PCE exerted a hepatoprotective effect by preventing apoptotic and inflammatory events caused by APAP. Thus, this study demonstrates a hepatoprotective effect of PCE, which could be explored further for managing hepatopathy.