2,5-Dihydroxy-1,4-benzoquinone (DHBQ) is one of the key chromophores formed upon aging in cellulosic materials. This study addresses the degradation mechanism of DHBQ by hydrogen peroxide to provide a solid knowledge base for optimization of bleaching sequences aiming at DHBQ removal. Kinetic analysis provided an activation energy (E(a)) of 20.4 kcal/mol. Product analyses indicated the product mixture to contain malonic acid, acetic acid, and carbon dioxide. DFT(B3LYP) computation presented a plausible mechanism for the formation of these products from DHBQ. DHBQ forms intermediate I2k, having an intramolecular O-O bridge between C-2 and C-5 of the 1,4-cyclohexadione structure. This O-O bond is homolytically cleaved, and the subsequent β-fragmentation of the resulting radical forms ketene and oxaloacetic acid. While ketene yields acetic acid, oxaloacetic acid then gives malonic acid and carbon dioxide through further attack of hydrogen peroxide via an intermediate that is oxidatively decarboxylated. The calculated E(a) value (23.3 kcal/mol) in the rate-determining step, i.e., the homolysis of I2k, agreed well with the experimental value. There is also a minor pathway in which the spin state changes to triplet during the homolysis of I2k; in this way two malonyl radicals are formed that are converted to two molecules of malonic acid.