Under secondary metabolic conditions, the white-rot basidiomycete Coriolus versicolor metabolized 4-methyldibenzothiophene (MDBT), which is a recalcitrant organic sulfur contaminant found in petroleum. The pathway of the transformation of MDBT was elucidated by the identification of fungal metabolites upon the addition of MDBT and its metabolic intermediates. S-oxidation to form MDBT-5-oxide was the initial step of MDBT metabolism. Then, the metabolic pathway was branched to form MDBT-5-dioxide, which was a dead-end product, and hydroxymethylDBT (HMDBT)-5-oxide. Extracellular ligninolytic enzymes such as lignin and manganese peroxidases and laccase did not catalyze the oxidation of either MDBT or MDBT-5-oxide. HMDBT-5-oxide was then oxidized to HMDBT-5-dioxide. Piperonyl butoxide, an inhibitor of cytochrome P450, suppressed fungal oxidation of MDBT to its oxide, MDBT-5-oxide;dde to dioxide and to HMDBT-5-oxide, and HMDBT-5-oxide to dioxide. The efficiency of the inhibition varied for each substrate, suggesting that each oxidation was catalyzed by different enzymes. The hydroxylation of methyl substituents to the hydroxymethyl group was suggested to be catalyzed by a novel monooxygenase. HMDBT-5-dioxide was finally xylosylated most likely by xylosyltrasferase to yield 10-(beta-D-xylopyranosyloxy)-4-methyldibenzothiophene-5-dioxide The final xyloside product and metabolic intermediates are water-extractable compounds, which would give us a novel strategy for biodesulfurization technology.