Accumulated data on the chemistry of lignin and its degradation by white-rot fungi has recently led to the postulation that oxygen radicals are involved in the extracellular transformations of the polymer effected by these organisms. In this study we investigated the possibility that the hydroxyl radical ((.)OH) derived from hydrogen peroxide (H(,2)O(,2)) is involved in the degradation of lignin by Phanerochaete chrysosporium, a typical white-rot fungus. When P. chrysosporium was grown in low N medium (2.4 mM N) an increase in the specific activity for H(,2)O(,2) production in cell extracts was observed to coincide with the appearance of ligninolytic activity and both activities appeared after the culture entered the stationary growth phase. Using cytochemical staining techniques and 3,3'-diaminobenzidine (DAB) the H(,2)O(,2) production activity in these cells was shown to be localized in the periplasmic space of cells from ligninolytic cultures. The intensity of the staining reaction (oxidized DAB deposits) in cells of various ages was qualitatively related to the levels of H(,2)O(,2) production activity and in turn to the ligninolytic capacity of the cells. Similar oxidized DAB deposits were not observed in cells from cultures grown in low N medium which had not entered the stationary growth phase and therefore were not ligninolytic. The production of (.)OH in ligninolytic cultures was demonstrated by (alpha)-keto-(gamma)-methiolbutyric acid dependent formation of ethylene. Hydrogen peroxide dependent (.)OH formation was also shown in cell extracts. The radical species produced was demonstrated to be the (.)OH by the (.)OH mediated hydroxylation of p-hydroxybenzoic acid to form protocatechuic acid and by using 5,5-dimethylpyrroline-N-oxide (DMPO) and electron paramagnetic resonance spectrometry to detect the production of the nitroxide radical of DMPO. These reactions were inhibited by (.)OH scavenging agents and were stimulated when azide was added to inhibit the endogenous catalase. Lignin degradation was markedly suppressed in the presence of the (.)OH scavenging agents mannitol, benzoate and the nonspecific radical scavenging agent butylated-hydroytoluene. The above results clearly indicate that the (.)OH derived from H(,2)O(,2) plays an integral role in lignin degradation by P. chrysosporium.