The biodegradation of lignin by fungi was studied in shake flasks using 14C-labeled kraft lignin and in a deep-tank fermentor using unlabeled kraft lignin. Among the fungi screened, A. furnigatus-isolated in our laboratorieswas most potent in lignin biotransformation. Dialysistype fermentation, designed to study possible accumulation of low MW lignin-derived products, showed no such accumulation. Recalcitrant carbohydrates like mi- crocrystalline cellulose supported higher lignolytic activity than easily metabolized carbohydrates like cellobiose. An assay developed to distinguish between Con evolved from lignin and carbohydrate substrates demonstrated no stoichiometric correlation between the metabolism of the two cosubstrates. The submerged fermentations with unlabeled lignin are difficult to monitor since chemical assays do not give accurate and true results. Lignolytic efficiencies that allowed monitoring of such fermentations were defined. Degraded lignins were analyzed for structural modifications. A. furnigatus was clearly superior to C. versicofor in all aspects of lignin degradation; A. furnigatus brought about substantial demethoxylation and dehydroxylation, whereas C. versicolor degraded lignins closely resembled undegraded kraft lignin. There was a good agreement among the different indices of lignin degradation, namely, ' T O evolution, OCH3 loss, OH loss, and monomer and dimer yield after permanganate oxidation.