Mycelia pellet formed spontaneously in the process of cultivation was exploited as a biological carrier for whole-cell immobilization due to its unique structural characteristic. An innovative two-species whole-cell immobilization system was achieved by inoculating the marine-derived fungus Pestalotiopsis sp. J63 spores into culture medium containing another fungus Penicillium janthinellum P1 pre-grown mycelia pellets for 2 days without any pretreatment. In order to evaluate the biological degradation capacity of this novel constructed immobilization system, the immobilized pellets were applied to treat paper mill effluent and decolorize dye Azure B. The use of the constructed immobilization system in the effluent resulted in successful and rapid biodegradation of numerous insoluble fine fibers. The optimum conditions of immobilized procedure for maximum biodegradation capacity were determined using orthogonal design with biomass of P1 pellets 10 g (wet mass), concentration of J63 spore 2 x 10(9) ml(-1), and immobilization time 2 d. The results demonstrate that immobilized pellets have more than 99% biodegradation capacity in a ten-hour treatment process. The kinetics of biodegradation fits the Michaelis-Menten equation well. Besides, the decolorization capability of immobilized pellets is more superior than that of P1 mycelia pellets. Overall, the present study offers a simple and reproducible way to construct a two-species whole-cell immobilization system for sewage treatment.