Medium optimization was carried out to enhance laccase production from a novel Rheinheimera species, isolated from industrial effluent. Out of the 15 variables tested by PlacketBurman design (PBD)yeast extract, soyabean meal, and peptone were the positively significant ones, enhancing laccase production. Both simple and complex sugars showed a negative effect on laccase production. Central composite design (CCD) of experiments, using the three positively significant variables in combinations, showed that laccase production was not affected by molar carbon, molar nitrogen levels or molar C/N ratio. Maximum laccase yield of 2.5 x 105 nkat L-1, 31 fold enhancement over the unoptimized medium, was achieved when soyabean meal (0.6%) was used alone as medium showing that laccase production was substrate dependent. Laccase was used, in the presence of 2 mM ABTS, for the biobleaching of eucalyptus kraft pulp resulting in kappa number reduction by 20% and brightness increase by 2.9%. Biobleaching improved further by sequential application of an alkalophilic xylanase (X) and laccase-ABTS system (LAS) that decreased kappa number by 10, 15, and 35%, increased brightness by 2.7, 3.2, and 5.9% as compared to X treated, LAS treated and untreated control, respectively. XLAS treatment resulted in 15, 13, 10.9% increase in burst factor, tear factor, and viscosity with a 20% reduced consumption of elemental chlorine and hypochlorite. (C) 2012 American Institute of Chemical Engineers Biotechnol. Prog., 2012