Saprotrophic fungi are key in global carbon cycling, capable of decomposing lignocellulose in wood. This study, for the first time, explores the influence of oxygen (O2) and temperature on methane (CH4) production by two fungi, Laetiporus sulphureus and Pleurotus sapidus. We examined CH4 formation under varying O2 levels (0 to 98%) and temperatures (17, 27, and 40 °C) when the fungi grew on pine wood, beech wood, and grass under sterile conditions. Our findings reveal a strong dependency of fungal CH4 production on O2 mixing ratios. Methane formation was highest when O2 levels exceeded 5%, whilst no CH4 formation was observed after complete O2 consumption by the fungi. Reintroducing O2 immediately resumed fungal CH4 production. When CH4 formation was normalized to O2 consumption (CH4_norm) a different pattern between species was observed. L. sulphureus showed higher CH4_norm rates with higher O2 levels, whereas P. sapidus showed elevated rates between 0-5% O2. Temperature also significantly influenced CH4 and CH4_norm rates, with the highest production at 27 °C, and comparatively lower rates at 17 and 40 °C. These results demonstrate that O2 levels and temperature are critical in controlling fungal CH4 emissions, a consideration necessary for future CH4 source predictions.