A novel cytoplasmic dye decolorizing peroxidase from Dictyostelium discoideum was investigated for its activity towards lignin oxidation. In contrast to related enzymes, an aspartate residue replaces the first glycine of the conserved GXXDG motif in Dictyostelium DyPA. In solution, Dictyostelium DyPA exists as a stable dimer and oxidizes anthraquinone dyes, lignin model compounds and general peroxidase substrates like ABTS efficiently. To gain mechanistic insights, we solved the Dictyostelium DyPA structures in the absence of substrate as well as in the presence of potassium cyanide and veratryl alcohol to 1.7, 1.85, and 1.6 Å resolution, respectively. The active site of Dictyostelium DyPA has a hexa-coordinated heme iron with a histidine residue at the distal and a water molecule at the axial face. Asp149 is in an optimal position to accept a proton from H2O2 during the formation of compound I. Two potential distal solvent channels and a conserved shallow pocket leading to the heme molecule were found in Dictyostelium DyPA. Further, we identified two substrate binding pockets per monomer in Dictyostelium DyPA at the dimer interface. Long range electron transfer pathways associated with a hydrogen bonding network that connects the substrate binding sites with the heme moiety are described.