Abstract: The white rot fungus isolated from continuous pulp and paper mill effluent irrigated soil and identified as Phanerochaete chrysosporium (TL 1) was capable of degrading pentachlorophenol. 14C synthetic lignin mineralization assays showed that the fungus assimilated 33.6% of the total label. Removal and degradation of pentachlorophenol (PCP) by the organism in static flask cultures was studied using ammonium lignosulphonate (LS), a waste product of paper mill industry, as a carbon and nitrogen source. After eight days, Phanerochaete chrysosporium (TL 1) grown in 2% LS (nitrogen sufficient) medium removed 85% of PCP which was comparable that of degradation in 2% glucose medium (93%). The presence of laccase (EC.1.10.3.2) extracellular activity suggested that the fungus secrete the enzyme into the extracellular medium, which was responsible for the degradation on PCP. The extracellular laccase activity was assayed on agarose plates containing ABTS.