Melanin is a hydrophobic biomolecule produced widely in fungi. Compared with other fungi, health benefits have been associated with medicinal mushrooms, which may provide an excellent source of natural melanin. Nevertheless, the hydrophobicity of melanin may limit its applications. Consequently, the present study was carried out on isolation of melanin from the medicinal mushroom Ganoderma lucidum (GLM) and modification with arginine to improve its solubility. The physicochemical and biochemical properties of melanin were evaluated including structural characterization, solubility, stability, antioxidant activities, and inhibitory effect on pancreatic lipase activity. Arginine‐modified melanin showed better solubility, higher color value, stronger antioxidant activity, and stronger inhibitory effect on pancreatic lipase activity in vitro than GLM. In addition, both have good stability in the dark and natural light. These results opened possibilities for providing an excellent source of natural melanin in health food or food additives fields.