In the cold regions of China, much of the lignin-rich corn straw accumulated due to low temperature limiting. However, the lack of psychrotrophic lignin-degrading strain resources hinders the lignin decomposition. Here, the whole genome of the psychrotrophic lignin-degrading bacterium Arthrobacter sp. C2, isolated in author’s previous work, was sequenced. Comparative genomics revealed that C2 contained unique genes related to lignin degradation and low-temperature adaptability. DyP may participate in lignin degradation and may be a cold-adapted enzyme. Moreover, DyP was proven to catalyze lignin Cα-Cβ bond cleavage. DyP gene deletion and complementation verified its ability to catalyze the first-step reaction of lignin degradation. Comparative transcriptome analysis revealed that the transcriptional expression of DyP gene was induced upregulation, and the genetic compensation mechanism endowed C2ΔDyP viability on lignin. This study improved the understanding of metabolic mechanism of psychrotrophic lignin-degrading bacteria and provided potential application options for energy-saving production using cold-adapted lignin-degrading enzymes.