||The growth and ligninolytic enzyme production of two typical lignin-degrading white-rot fungi Phanerochaet chrysosporium and Trametes versicolor were studied. Lactase was the major ligninolytic enzyme produced by Trametes versicolor in secondary metabolism and triggered by N- or C-limitation, in the presence of oxygen. The yield of enzyme production by old mycelium (125 U/g) was much higher than that by new mycelium (70 U/g for C-limited and 55 U/g for N-limited) in batch cultures. Lignin peroxidase (Lip) was the major ligninolytic enzyme produced by P. chrysosporium in a strict secondary metabolism, triggered by nutrient starvation and induced by veratryl alcohol (VA). The yield of lignin peroxidase production by old mycelium (21 U/g) was lower than that by new mycelium (25 U/g for C-limited and 30 U/g for N-limited). Lignin peroxidase was sensitive to shear stress and protease. Three typical synthetic dyes (azo, anthraquinone and indigo) were decolorized in vitro by P. chrysosporium and T. versicolor. Dye degradation by three systems including fermentation broth, crude enzymes and enzyme plus mediators (substrates) were studied. A mechanism of lactase-catalyzed dye degradation is proposed based on experimental evidence. The enzyme is first oxidized by O2 to form oxidized enzyme which can take electrons away from its substrates (dyes, mediators). The oxidized substrate radicals may be further decomposed or reduced by oxidizing other substrates or dyes. By this mechanism, the enzyme can decolorize synthetic dyes of various structures at a high rate. HPLC analysis of the intermediates and end products from dye degradation showed that the decolorized dyes by the in vitro systems could still have residual fragments such as aromatic rings which had high UV adsorption. The presence of living fungal cells, however, showed a better extent of dye degradation than that of in vitro systems. HPLC chromatograms of degradation products indicate that P. chrysosporium can completely degrade the dyes in two days without the residual aromatic or other electron rich fragments of high UV absorption. T. versicolor has a high decolorization rate but can not completely degrade indigo and anthraquinone dyes (AG27) in 2 days. Adsorption of dye molecules on fungal biomass also contributed to the overall color removal from water. Quantitative adsorption of three dyes on fungal mycelia was investigated. Depending on the structure of individual dyes, the adsorption capacity (Q) and adsorption affinity (K) were different. The adsorption site on biomass could be regenerated by physical desorption and enzymatic degradation; the latter was the major mechanism in regeneration of the dye-saturated biomass. Both intracellular and extracellular enzymes of T. versicolor contributed to the degradation of the adsorbed dyes.