There has been increasing interest in extracellular enzymes from white rot fungi, such as lignin and manganese peroxidases, and laccases, due to their potential to degrade both highly toxic phenolic compounds and lignin. The optimum cultivation conditions for laccase production in semi-solid and liquid medium by Trametes versicolor, Trametes villosa, Lentinula edodes and Botrytis cinerea and the effects of laccase mediator system in E-1 effluent were studied. The higher laccase activity (12756 U) was obtained in a liquid culture of T. versicolor in the presence of 1 mM of 2,5-xylidine and 0.4 mM copper salt as inducers. The effluent biotreatments were not efficient in decolorization with any fungal laccases studied. Maximum phenol reduction was approximately 23% in the absence of mediators from T. versicolor. The presence of 1-hydroxybenzotriazole did not increase phenol reduction. However, acetohydroxamic acid, which was not degraded by laccase, acted very efficiently on E-1 effluent, reducing 70% and 73% of the total phenol and total organic carbon, respectively. Therefore, acetohydroxamic acid could be applied as a mediator for laccase bioremediation in E-1 effluent. (c) 2005 Elsevier Ltd. All rights reserved.