Production of value-added compounds from a renewable aromatic polymer, lignin, has proven to be challenging. Chemical procedures, involving harsh reaction conditions, are costly and often result in nonselective degradation of lignin linkages. Therefore, enzymatic catalysis with selective cleavage of lignin bonds provides a sustainable option for lignin valorization. In this study, we describe the first functionally characterized fungal intracellular β-etherase from the wood-degrading white-rot basidiomycete Dichomitus squalens. This enzyme, Ds-GST1, from the glutathione-S-transferase superfamily selectively cleaved the β-O-4 aryl ether bond of a dimeric lignin model compound in a glutathione-dependent reaction. Ds-GST1 also demonstrated activity on polymeric synthetic lignin fractions, shown by a decrease in molecular weight distribution of the laccase-oxidized guaiacyl dehydrogenation polymer. In addition to a possible role of Ds-GST1 in intracellular catabolism of lignin-derived aromatic compounds, the cleavage of the most abundant linkages in lignin under mild reaction conditions makes this biocatalyst an attractive green alternative in biotechnological applications.