Chopped paddy straw was use as a substrate to study the pattern of biodegradation after inoculation (singly or in combination) with four cellulolytic fungi: Trichoderma reesei QM 9414, T. viride, Pleurotus sajor-caju and Coprinus cinereus. To assess the rate of biodegradation, samples were drawn at regular intervals and analysed for organic carbon, total nitrogen, humus synthesis and respiratory activities of the degrading substrate. The C:N ratio was also calculated to judge the extent of biodegradation. Maximum lowering of the C:N ratio was observed in the treatment where dual inoculation with T. reesei and P. sajor-caju was done. A pot-culture experiment was conducted to assess the effects of application of composted paddy straw on the yield of wheat. Application of the paddy straw degraded by the two fungi, in combination with urea at 80 kg N ha-1, produced a significant effect on the yield of wheat.