The main aim of this study was to screen and identify cadmium-resistant fungus and to characterize its cadmium adsorption. A cadmium-resistant strain (CN35) was isolated from cadmium-polluted paddy soil. Based on morphlogical characteristics, internal transcribed spacers region and β-tubulin gene sequence phylogenesis analysis, the strain was preliminarily identified to be Penicillium sp. This strain was resistant to Cd at 45 mM with Cd adsorption rate up to 83.56%, and also resistant to other heavy metals such as Pb, Zn, and Cu. When Cd²⁺ concentration ranged from 2 to 5 mM, the fungal colony changed from yellow/green to red. The colony morphology was also affected by Cd²⁺ concentrations with protuberances forming on the colony surface at 20 mM. The strain CN35 was found to grow well at pH 4 to 8 at between 24ºC and 37ºC, and the optimal growth conditions were established to be at pH 4 and 30ºC. Fermented liquid of the strain is neither disease-causing nor inhibitory to rice seedling emergence, but rather improves rice seedling and root growth and enhances rice detoxification ability under Cd stress. Thus, the Cd-resistant fungus CN35 has the potential to treat Cd-polluted rice paddies.