Stropharia rugosoannulatahas been used in environmental engineering to degrade straw in China. The nitrogen and carbon metabolisms are the most important factors affecting mushroom growth, and the aim of this study was to understand the effects of different nitrogen levels on carbon metabolism inS. rugosoannulatausing transcriptome analysis. The mycelia were highly branched and elongated rapidly in A3 (1.37% nitrogen). GO and KEGG enrichment analyses revealed that the differentially expressed genes (DEGs) were mainly involved in starch and sucrose metabolism; nitrogen metabolism; glycine, serine and threonine metabolism; the MAPK signaling pathway; hydrolase activity on glycosyl bonds; and hemicellulose metabolic processes. The activities of nitrogen metabolic enzymes were highest in A1 (0.39% nitrogen) during the three nitrogen levels (A1, A2 and A3). However, the activities of cellulose enzymes were highest in A3, while the hemicellulase xylanase activity was highest in A1. The DEGs associated with CAZymes, starch and sucrose metabolism and the MAPK signaling pathway were also most highly expressed in A3. These results suggested that increased nitrogen levels can upregulate carbon metabolism inS. rugosoannulata. This study could increase knowledge of the lignocellulose bioconversion pathways and improve biodegradation efficiency in Basidiomycetes.