The fungal metabolism of 4-nitrophenol (4-NP) was investigated using the lignin-degrading basidiomycete, Phanerochaete chrysosporium. Despite its phenolic feature, 4-NP was not oxidized by extracellular ligninolytic peroxidases. However, 4-NP was converted to 1,2-dimethoxy-4-nitrobenzene via intermediate formation of 4-nitroanisole by the fungus only under ligninolytic conditions. The metabolism proceeded via hydroxylation of the aromatic ring and methylation of phenolic hydroxyl groups. Although the involvement of nitroreductase in the metabolism of 2,4-dinitrotoluene by many aerobic and anaerobic microorganisms including P. chrysosporium has been reported, no formation of 4-aminophenol was observed during 4-NP metabolism. The formation of 1,2-dimethoxy-4-nitrobenzene was effectively inhibited by exogenously added piperonyl butoxide, a cytochrome P450 inhibitor, suggesting that cytochrome P450 is involved in the hydroxylation reaction. Thus, P. chrysosporium seems to utilize hydroxylation and methylation reactions to produce a more susceptible structure for an oxidative metabolic system.