The wastewaters of molasses-based alcohol distilleries contain brown colored melanoidin pigments that are one of the major pollutants. We reported decolorization of such intensely brown colored molasses spent wash (MSW) by Flavodon flavus, a white-rot basidiomycete fungus isolated from a marine habitat. We have further attempted to improve the process of decolorization of MSW by this fungus by immobilization. Polyurethane foam-immobilized-fungus decolorized 10% diluted MSW by 60 and 73% by days 5 and 7, respectively. The immobilized fungus could be effectively used for a minimum of three cycles repeatedly to decolorize MSW. Besides decolorization, the fungus also removed the toxicity of MSW. Toxicity bioassay of the fungus-treaied molasses spent wash using an estuarine fish Oreochromis mossambicus showed no liver damage in contrast to untreated effluent, which showed moderate liver damage. We detected benzo(a)pyrene, a polycyclic aromatic hydrocarbon (PAH) in the MSW and this appears to be, one of the causes of toxicity of the MSW. The concentration of PAH in the MSW decreased by 68% by day 5 on treatment with the fungus. This is the first report where decolorization of MSW is accompanied by simultaneous detoxification and decrease,in PAH content of the MSW. A comparison of gel filtration chromatography of MSW, before and after treatment with the immobilized F. flavus showed disappearance of the most of the colored fractions in the fungus-treated MSW. A possible mechanism of decolorization of MSW is via the action of glucose oxidase accompanied by production of hydrogen peroxide that may ultimately act as a bleaching agent. (C) 2004 Elsevier Inc. All rights reserved.