Treatment of dye effluents poses a major problem and biotreatment by white rot fungus seems to be a viable option. The application of the fungus in wastewater treatment under non-sterile conditions has been limited owing to contamination by bacteria and other microorganisms. We designed a novel system comprising 100 ml/L (0.01 mol/L, pH 4.0) lactic acid buffer solution, 100 mg/L dye and mycelial pellets (with 3.0 g/L wood chips), in which Schizophyllum sp. F17 could effectively decolorize and degrade dyes having different structures, and the decolorization ratios of Congo Red, Alizarin Red, Neutral Red and Crystal Violet reached 92.4%, 93.4%, 83.6% and 70.5%, respectively, after 120 h. The decolorization and degradation of Congo Red in the system were investigated under sterile and non-sterile conditions, and the degradation ratio reached 83.2% and 78.6% respectively, after 120 h. No obvious difference was observed under non-sterile and sterile conditions in the degradation of Congo Red. There was a good linear relationship between the cumulative activity of manganese peroxidase (the main degradation enzyme) and the decolorization ratio, in which the correlation coefficient was 0.986. The degradation product of Congo Red was separated by high-performance liquid chromatography, and was identified as benzidine. (C) 2010 Elsevier B.V. All rights reserved.