The screening of a strain which could perform lignin removal was carried out. Based on taxonomic study the isolated strain (LM-2) was identified as Penicillium sp. LM-2 could decolorize 0.6g dm(-3) lignin within 4 days in a shaking culture at 25degreesC. The efficiency of decolorization of the lignin was over 80% in the pH range of 4.0-6.0, but was low above pH 6.2. The rise of temperature had a slight adverse effect on the lignin decolorization in the range of 25-35degreesC. Lignolytic enzymes such as lignin peroxidase, manganese peroxidase and laccase were not detected in the culture broth or within the fungal cells. The lignin was removed from the high molecular weight fraction mainly by adsorption and accumulation inside the cells.