Display omitted •A novel Hg(II)-volatilizing fungus showed bioremediation potentials.•The mer-mediated detoxification system was responsible for Hg(II) volatilization in fungus.•Resistance of DC-F11 to Hg(II) was generally a multisystem collaborative process. Bioremediation of Hg-contaminated soil using microbe-based strategies is a promising and efficient method as it is inexpensive and not harmful to the environment. In this study, a novel Hg(II)-volatilizing fungus Penicillium spp., DC-F11 was isolated and showed bioremediation potential for reducing Hg(II) phytotoxicity, total Hg, and exchangeable Hg in Hg(II)-polluted soil. Subsequently, the mechanisms of Hg(II) volatilization and resistance involved were investigated using multiple complementary techniques. The fungal cells could detoxify Hg(II) by extracellular sequestration via adsorption and precipitation. Moreover, a comparative transcriptome analysis uncovered the primary intracellular adaptive responses of the DC-F11 to Hg(II) stress, including mer-mediated detoxification system, thiol compound metabolism, and oxidative stress defense and damage repair metabolism. These results showed that the resistance of DC-F11 to Hg(II) was generally a multisystem collaborative process. Here, we report, for the first time, that the mer-mediated detoxification system was responsible for Hg(II) volatilization in fungus. These findings provide a better understanding of the mechanisms involved in Hg(II) volatilization and resistance that occur in fungi and also provide a strong theoretical basis for the future application of fungi in the bioremediation of Hg-polluted environments.