The widely used anticonvulsant pharmaceutical carbamazepine is recalcitrant in many environmental niches and thus poses a challenge in wastewater treatment. We followed the decomposition of carbamazepine by the white-rot fungus Pleurotus ostreatus in liquid culture compared to solid-state fermentation on lignocellulosic substrate where different enzymatic systems are active. Carbamazepine metabolites were identified using liquid chromatography–high-resolution mass spectrometry (LC-Q-TOF-MS). In liquid culture, carbamazepine was only transformed to 10,11-epoxy carbamazepine and 10,11-dihydroxy carbamazepine as a dead-end product. During solid-state fermentation, carbamazepine metabolism resulted in the generation of an additional 22 transformation products, some of which are toxic. Under solid-state-fermentation conditions, 10,11-epoxy carbamazepine was further metabolized via acridine and 10,11-dihydroxy carbamazepine pathways. The latter was further metabolized via five subpathways. When ¹⁴C-carbonyl-labeled carbamazepine was used as the substrate, ¹⁴C-CO₂ release amounted to 17.4% of the initial radioactivity after 63 days of incubation. The proposed pathways were validated using metabolites (10,11-epoxy carbamazepine, 10,11-dihydroxy carbamazepine, and acridine) as primary substrates and following their fate at different time points. This work highlights the effect of growth conditions on the transformation pathways of xenobiotics. A better understanding of the fate of pollutants during bioremediation treatments is important for establishment of such technologies.