Bioactivities of fungal peptides are of interest for basic research and therapeutic drug development. Some of these peptides are derived from “KEX2-processed repeat proteins” (KEPs), a recently defined class of precursor proteins that contain multiple peptide cores flanked by KEX2 protease cleavage sites. Genome mining has revealed that KEPs are widespread in the fungal kingdom. Their functions are largely unknown. Here, we present the first in-depth structural and functional analysis of KEPs in a basidiomycete. We bioinformatically identified KEP-encoding genes in the genome of the model agaricomycete Coprinopsis cinerea and established a detection protocol for the derived peptides by overexpressing the C. cinerea KEPs in the yeast Pichia pastoris. Using this protocol, which includes peptide extraction and mass spectrometry with data analysis using the search engine Mascot, we confirmed the presence of several KEP-derived peptides in C. cinerea as well as in the edible mushrooms Lentinula edodes, Pleurotus ostreatus and Pleurotus eryngii. Processing by the dipeptidyl aminopeptidase STE13 is likely involved in the biosynthesis of some of these peptides. While CRISPR-mediated knockouts of the C. cinerea kep genes did not result in any detectable phenotype, knockout of kex genes caused defects in mycelial growth and fruiting body formation. These results suggest that KEP-derived peptides may play a role in the interaction of C. cinerea with the biotic environment and that the KEP-processing KEX proteases target a variety of substrates in agaricomycetes, including some important for mycelial growth and differentiation. In the past, fungal RiPPs and KEP-derived peptides were mostly studied using forward genetics, where the peptides were first isolated and characterized and only then the corresponding precursor genes were identified (e.g., ustiloxins, phomopsins, candidalysin, Rep1, omphalotin). In this paper, we established a protocol for the identification of KEP-derived peptides in fungal samples by a combination of reverse genetics and peptidomics. The protocol was developed using the model agaricomycete Coprinopsis cinerea, but is also applicable to other fungi. In a first step, we bioinformatically screened the predicted proteome of C. cinerea for KEP-encoding genes. Second, we expressed six different KEP genes from C. cinerea in the yeast Pichia pastoris to (1) establish a protocol for extraction and detection of KEP-derived peptides by mass spectrometry in P. pastoris culture supernatants known for their low complexity in terms of proteins and peptides (Higgins 1995); (2) obtain an indication that the detected KEPs were indeed processed to peptides, and (3) use the structures of the detected peptides as a guide for which peptides to expect in C. cinerea in terms of peptide length and peptide modifications. In a third step, we applied the established peptide extraction and detection method to detect KEP-derived peptides in culture supernatants and tissue samples of the agaricomycetes C. cinerea, Lentinula edodes, Pleurotus ostreatus and Pleurotus eryngii.