The substantial potential applications of lignin-degrading microbes and enzymes have spurred research on lignin biodegradation in recent years. As described here, that research has led to the discovery in the basidiomycete Phanerochaete chrysosporium of the first lignin-degrading enzymes and elucidation of their mode of action. A family of powerful extracellular peroxidase isoenzymes has been the focus of most investigations. The key catalytic reaction of these glycoproteins, in the presence of hydrogen peroxide, is one-electron oxidation of aromatic nuclei, generating unstable aryl cation radicals. These decompose via a number of reactions, which have been elucidated with dimeric model compounds for lignin. The involvement of carboncentred and peroxyl free-radical intermediates has been established. The peroxyl intermediates result from the addition of molecular oxygen to the C-centred radicals. Strong evidence for a classical peroxidase-type catalytic cycle of the ligninases has been obtained. The major research need is to identify the full complement of enzymes needed to degrade lignin to small fragments; this degradation is not accomplished by the isolated ligninases or by the crude extracellular mixture of enzymes secreted by cultures as they degrade lignin.