Mycelial growth and extracellular polysaccharide production of Phellinus linteus were optimal at pH 5 and 25 degreesC. Maximum biomass production (14.2 g l(-1)) was after 15 d of cultivation, whereas, extracellular polysaccharide was maximal (3.5 g l(-1)) after 21 d. The hypoglycemic effect of the polysaccharide, investigated in streptozotocin-induced diabetic rats, decreased plasma glucose, total cholesterol and triacylglycerol concentrations by 49%, 32%, and 28%, respectively, and aspartate aminotransferase activity by 20%. The results indicate the potential of this polysaccharide to prevent hyperglycemia in diabetic patients.