The basidiomycete Gloeophyllum trabeum KU-41 can degrade Japanese cedar wood efficiently. To construct a strain better suited for biofuel production from Japanese cedar wood, we developed a gene transformation system for G. trabeum KU-41 using the hygromycin phosphotransferase-encoding gene (hpt) as a marker. The endogenous laccase candidate gene (Gtlcc3) was fused with the promoter of the G. trabeum glyceraldehyde-3-phosphate dehydrogenase-encoding gene and co-transformed with the hpt-bearing pAH marker plasmid. We obtained 44 co-transformants, and identified co-transformant L#61, which showed the highest laccase activity among all the transformants. Moreover, strain L#61 was able to degrade lignin in Japanese cedar wood-containing medium, in contrast to wild-type G. trabeum KU-41 and to a typical white-rot fungus Phanerochaete chrysosporium. By using strain L#61, direct ethanol production from Japanese cedar wood was improved compared to wild type. To our knowledge, this study is the first report of the molecular breeding of lignin-degrading brown-rot fungus and direct ethanol production from softwoods by co-transformation with laccase overproduction constructs.