As a well-known edible fungus that generally grows at low temperature, Flammulina velutipes is believed to be able to withstand most undesirable microbes. However, in this study, we discovered and isolated a cold-adapted bacteria that developed rapidly and caused soft rot in the stipe of F. velutipes. The pathogen was identified as Mycetocola saprophilus based on morphology, 16S rRNA sequences, and multilocus sequence typing (MLST) analysis. To further understand the pathogenic mechanisms of soft rot disease in F. velutipes, we sequenced and analyzed the genome of strain JXN-3 using PacBio sequencing. The de-novo assembly of the genome of strain JXN-3 was ~3.47 Mb, with a GC content of 66.32%. The genome was composed of 3276 genes, of which 3094 were protein coding. Many of the identified protein-coding genes were associated with the synthesis of cell wall-degrading enzymes and antifungal compounds, including chitin deacetylase, chitinase, 1,4-beta-D-glucan glucohydrolase, beta-glucanase, endoglucanase Acf2, exo-beta-1,3-glucanase, and bacteriocin. Compared with other members of Mycetocola, we also found a JXN-3-unique gene cluster for synthesizing bacteriocin. These genes may contribute to the pathogenesis of soft rot in F. velutipes stipes. Future studies should further investigate the involvement of these proteins in the incidence and progression of soft rot disease in F. velutipes.