The FAD/heme enzyme cellobiose dehydrogenase (CDH) has been frequently isolated from several white-rot fungi, but is also produced by a few brown-rot fungi. CDH is a sugar oxidase that oxidises cellobiose to cellobiono-1,5-lactone and reduces a great number of electron accepters such as quinones, phenoxy and cation radicals, Fe(III), cytochrome c and molecular oxygen. We suggest that CDH is involved in lignin degradation as this enzyme can reduce phenoxy radicals, and thereby regulate lignin polymerisation/depolymerisation. Furthermore, we have shown that P. chrysosporium can produce CDH together with MnP and LiP, under conditions where lignin degradation, measured as [C-14] DHP mineralization, occurs and demonstrated how active CDH may help complete the catalytic cycles of the peroxidases when their natural substrates are not available. Possible physiological roles of CDH on the mechanisms of lignin degradation and its potential for pulp and paper biotechnology are presented.