Background: Penicillium funiculosum NCIM1228 is a non-model filamentous fungus that produces high-quality secretome for lignocellulosic biomass saccharification. Despite having desirable traits to be an industrial workhorse, P. funiculosum has been underestimated due to a lack of reliable genetic engineering tools. Tolerance towards common fungal antibiotics had been one of the major hindrances towards development of reliable transformation tools against the non-model fungi. In this study, we sought to understand the mechanism of drug tolerance of P. funiculosum and the provision to counter it. We then attempted to identify a robust method of transformation for genome engineering of this fungus. Results: Penicillium funiculosum showed a high degree of drug tolerance towards hygromycin, zeocin and nourseothricin, thereby hindering their use as selectable markers to obtain recombinant transformants. Transcriptome analysis suggested a high level expression of efflux pumps belonging to ABC and MFS family, especially when complex carbon was used in growth media. Antibiotic selection medium was optimized using a combination of efflux pump inhibitors and suitable carbon source to prevent drug tolerability. Protoplast-mediated and Agrobacterium-mediated transformation were attempted for identifying efficiencies of linear and circular DNA in performing genetic manipulation. After finding Ti-plasmid-based Agrobacterium-mediated transformation more suitable for P. funiculosum, we improvised the system to achieve random and homologous recombination-based gene integration and deletion, respectively. We found single-copy random integration of the T-DNA cassette and could achieve 60% efficiency in homologous recombination-based gene deletions. A faster, plasmid-free, and protoplast-based CRISPR/Cas9 gene-editing system was also developed for P. funiculosum. To show its utility in P. funiculosum, we deleted the gene coding for the most abundant cellulase Cellobiohydrolase I (CBH1) using a pair of sgRNA directed towards both ends of cbh1 open reading frame. Functional analysis of ∆cbh1 strain revealed its essentiality for the cellulolytic trait of P. funiculosum secretome. Conclusions: In this study, we addressed drug tolerability of P. funiculosum and developed an optimized toolkit for its genome modification. Hence, we set the foundation for gene function analysis and further genetic improvements of P. funiculosum using both traditional and advanced methods.