Oxalate is produced by numerous wood-degrading fungi. Our studies here show that the white-rot fungus Phanerochaete chrysosporium produces extracellular oxalate under conditions that induce synthesis of the ligninolytic system. Little or no oxalate was detected in cultures grown under high nutrient nitrogen or carbon. This extracellular oxalate was identified and quantitated by HPLC. Its identity was further substantiated by its decomposition by the enzyme oxalate oxidase. The oxalate content of the extracellular fluid (peaking at 60 microM) paralleled the extracellular activity of the lignin-degrading enzyme, Mn peroxidase. Significantly, we demonstrated that oxalate, at physiological concentrations, substantially stimulated Mn peroxidase-catalyzed phenol red oxidation, presumably by its ability to chelate Mn. Stopped flow studies also indicate that oxalate accelerates the turnover of Mn peroxidase. Furthermore, we discovered that oxalate can support Mn peroxidase-catalyzed oxidations in the absence of exogenous H2O2 and in the presence of dioxygen. These results allow us to propose an important role for oxalate, a ubiquitous compound produced by wood-destroying fungi, in lignin biodegradation.