Flammulina filiformis, a widely cultivated edible fungus, frequently suffers from strain degeneration, leading to reduce yield and quality, and causing significant economic losses in large-scale production. This study aimed to better understand degeneration mechanisms and to develop an assay for predicting degeneration.This study investigates strain degeneration by comparing a cultivated strain (F1) and its subcultured derivative (F7). Although both strains display similar mycelial growth, F7 shows impaired fruiting body production, indicating that degeneration occurs prior to visible changes in mycelial growth. To uncover the molecular mechanisms underlying degeneration, transcriptome analysis was carried out. A total of 352 down-regulated and 280 up-regulated differentially expressed genes (DEGs) were identified in F7 compared to F1. Gene Ontology and Kyoto Encyclopedia of Genes and Genomes analyses revealed significant enrichment of DEGs in functional categories related to oxidoreductase activities and peroxisome pathway. Quantitative PCR further validated the regulation of certain DEGs associated with these enriched functions. A stress tolerance assay was developed to detect degeneration in strains with unchanged mycelial growth but reduced fruiting body production.Results suggested that strain degeneration in F. filiformis is closely linked to oxidative stress regulation and occurs prior to observable mycelial impairment.