Ethyl carbamate (EC) formed in the process of alcohol beverage production and food fermentation has been shown to possibly be carcinogenic and genotoxic to humans. EC can be degraded by urethanase and yield the nontoxic substances ammonia, ethanol, and carbon dioxide. The application of urethanase in beverage or fermented-food production is a practical way of reducing cancer risk due to EC and of ensuring food safety. The gene encoding urethanase from Lysinibacillus fusiformis SCO2 was decoded. This is the second reported urethanase with known sequence. Urethanase was successfully overexpressed in Escherichia coli, and expression of this enzyme was enhanced to 14.7 U/mL by optimizing the medium formula, temperature, and isopropyl β-D-thiogalactoside (IPTG) concentration for induced expression. L. fusiformis SCO2 urethanase showed a promising capability in degrading EC in soy sauce and Huangjiu (Chinese rice wine) with reduction rates of 29.5 and 14.7%, respectively. Identification of the coding gene of urethanase and its heterologous expression establishes the fundamentals for its industrial application for decreasing EC in fermented foods and alcohol beverages.