The carnivorous mushroom Pleurotus ostreatus uses an unknown toxin to rapidly paralyze and kill nematode prey upon contact. We report that small lollipop-shaped structures (toxocysts) on fungal hyphae are nematicidal and that a volatile ketone, 3-octanone, is detected in these fragile toxocysts. Treatment of Caenorhabditis elegans with 3-octanone recapitulates the rapid paralysis, calcium influx, and neuronal cell death arising from fungal contact. Moreover, 3-octanone disrupts cell membrane integrity, resulting in extracellular calcium influx into cytosol and mitochondria, propagating cell death throughout the entire organism. Last, we demonstrate that structurally related compounds are also biotoxic to C. elegans, with the length of the ketone carbon chain being crucial. Our work reveals that the oyster mushroom has evolved a specialized structure containing a volatile ketone to disrupt the cell membrane integrity of its prey, leading to rapid cell and organismal death in nematodes.