Glycerol is a major byproduct of biodiesel production and enzymes that oxidize this compound have been long sought after. The recently described alcohol oxidase from the white-rot basidiomycete Phanerochaete chrysosporium (PcAOX) was reported to feature very mild activity on glycerol. Here we describe the comprehensive structural and biochemical characterization of this enzyme. PcAOX was expressed in Escherichia coli in high yields and displayed high thermostability. Steady-state kinetics revealed that PcAOX is highly active towards methanol, ethanol, and 1-propanol (kcat = 18, 19, and 11 s−1, respectively), but showed very limited activity towards glycerol (kcat = 0.2 s−1 at 2 M substrate). The crystal structure of the homo-octameric PcAOX was determined at 2.6 Å resolution. The catalytic center is a remarkable solvent-inaccessible cavity located at the re side of the flavin cofactor. Its small size explains the observed preference for methanol and ethanol as best substrates. These findings led us to design several cavity-enlarging mutants with significantly improved activity towards glycerol. Among them, the F101S variant had a high kcat value of 3 s−1 retaining a high degree of thermostability. The crystal structure of F101S PcAOX was solved, confirming the site of mutation and the larger substrate-binding pocket. Our data demonstrate that PcAOX is a very promising enzyme for glycerol biotransformation