Locally isolated fungus, Neurospora discreta, was evaluated for its ability to degrade lignin in two agricultural residues: cocopeat and sugarcane bagasse with varying lignin concentrations and structures. Using Klason's lignin estimation, high-performance liquid chromatography, and UV-visible spectroscopy, we found that N. discreta was able to degrade up to twice as much lignin in sugarcane bagasse as the well-known white rot fungus Phanerochaete chrysosporium and produced nearly 1.5 times the amount of lignin degradation products in submerged culture. Based on this data, N. discreta is a promising alternative to white rot fungi for faster microbial pre-treatment of agricultural residues. This paper presents the lignin degrading capability of N. discreta for the first time and also discusses the difference in biodegradability of cocopeat and sugarcane bagasse as seen from the analysis carried out using Fourier transform infrared spectroscopy.