© 2014 Yap et al.; licensee BioMed Central Ltd. Background: The sclerotium of Lignosus rhinocerotis (Cooke) Ryvarden or Tiger milk mushroom (Polyporales, Basidiomycota) is a valuable folk medicine for indigenous peoples in Southeast Asia. Despite the increasing interest in this ethnobotanical mushroom, very little is known about the molecular and genetic basis of its medicinal and nutraceutical properties.Results: The de novo assembled 34.3 Mb L. rhinocerotis genome encodes 10,742 putative genes with 84.30% of them having detectable sequence similarities to others available in public databases. Phylogenetic analysis revealed a close evolutionary relationship of L. rhinocerotis to Ganoderma lucidum, Dichomitus squalens, and Trametes versicolor in the core polyporoid clade. The L. rhinocerotis genome encodes a repertoire of enzymes engaged in carbohydrate and glycoconjugate metabolism, along with cytochrome P450s, putative bioactive proteins (lectins and fungal immunomodulatory proteins) and laccases. Other genes annotated include those encoding key enzymes for secondary metabolite biosynthesis, including those from polyketide, nonribosomal peptide, and triterpenoid pathways. Among them, the L. rhinocerotis genome is particularly enriched with sesquiterpenoid biosynthesis genes.Conclusions: The genome content of L. rhinocerotis provides insights into the genetic basis of its reported medicinal properties as well as serving as a platform to further characterize putative bioactive proteins and secondary metabolite pathway enzymes and as a reference for comparative genomics of polyporoid fungi.