Many fungi (particularly the white rot) are well suited for treatment of a broad range of textile dye effluents due to the versatility of the lignin-degrading enzymes produced by them. We have investigated decolourization of a number of recalcitrant reactive azo and acid dyes using the culture filtrate and purified laccase from the fungus Cyathus bulleri. For this, the enzyme was purified from the culture filtrate to a high specific activity of 4,022 IU mg(-1) protein, produced under optimized carbon, nitrogen and C/N ratio with induction by 2,6-dimethylaniline. The protein was characterized as a monomer of 58 +/- 5.0 kDa with carbohydrate content of 16% and was found to contain all three Cu(II) centres. The three internal peptide sequences showed sequence identity (80-92%) with laccases of a number of white rot fungi. Substrate specificity indicated highest catalytic efficiency (k(cat)/K-M) on guaiacol followed by 2,2'-azino-bis(3-ethylthiazoline-6-sulfonic acid) (ABTS). Decolourization of a number of reactive azo and acid dyes was seen with the culture filtrate of the fungus containing predominantly laccase. In spite of no observable effect of purified laccase on other dyes, the ability to decolourize these was achieved in the presence of the redox mediator ABTS, with 50% decolourization in 0.5-5.4 days.