Ligninase-I (Mr 42,000-43,000; carbohydrate, 21%) and peroxidase-M2 (Mr 45,000-47,000; carbohydrate, 17%), two representative, hydrogen peroxide-dependent extracellular enzymes produced by ligninolytic cultures of the white-rot fungus Phanerochaete chrysosporium BKM-F-1767, were purified and their properties compared. Spectroscopic studies showed that both native enzymes are heme proteins containing protoporphyrin IX. EPR spectroscopy indicated that iron ions are coordinated with the enzymes' prosthetic groups as high-spin ferriheme complexes. We confirmed reports of others that the ligninase-hydrogen peroxide complex (activated enzyme) reverts to its native state on addition of dithionite or one of the enzyme's substrates (e.g., veratryl alcohol); however, we found that the peroxidase-M2-hydrogen peroxide complex required Mn2+ ions to accomplish a similar cycle. The peroxidase oxidized Mn2+ to a higher oxidation state, and the oxidized Mn acted as a diffusible catalyst able to oxidize numerous organic substrates. Unlike ligninase-I which is found free extracellularly, peroxidase-M2 appears to be associated closely with the fungal mycelium. In its peroxidatic reactions, ligninase-I oxidizes a variety of nonphenolic and phenolic lignin model compounds. In the presence of Mn2+, peroxidase-M2 oxidizes numerous phenolic compounds, especially syringyl (3,5-dimethoxy-4-hydroxyphenyl) and vinyl side-chain substituted substrates. Also, the peroxidase-Mn2+ system (without hydrogen peroxide) expresses oxidase activity against NADPH, GSH, dithiothreitol, and dihydroxymaleic acid, forming hydrogen peroxide at the expense of oxygen. Both enzymes were believed to play roles in lignin degradation, and these are discussed.