Wood is the main renewable material on Earth and is largely used as building material and in paper-pulp manufacturing. This review describes the composition of lignocellulosic materials, the different processes by which fungi are able to alter wood, including decay patterns caused by white, brown, and soft-rot fungi, and fungal staining of wood. The chemical, enzymatic, and molecular aspects of the fungal attack of lignin, which represents the key step in wood decay, are also discussed. Modern analytical techniques to investigate fungal degradation and modification of the lignin polymer are reviewed, as are the different oxidative enzymes (oxidoreductases) involved in lignin degradation. These include laccases, high redox potential ligninolytic peroxidases (lignin peroxidase, manganese peroxidase, and versatile peroxidase), and oxidases. Special emphasis is given to the reactions catalyzed, their synergistic action on lignin, and the structural bases for their unique catalytic properties. Broadening our knowledge of lignocellulose biodegradation processes should contribute to better control of wood-decaying fungi, as well as to the development of new biocatalysts of industrial interest based on these organisms and their enzymes.These studies have been partially supported by ENCE (Spain), by Spanish projects AGL2002-393 and BIO2002-1166, by EU projects QLK5-99-1357 and QLK3-99-590, and by an EUFORES(ENCE)-PDT/MEC(Uruguay) grant. Carmen Ascaso (CCMA, CSIC, Madrid) is acknowledged for low-temperature scanning-electron microscopy facilities. Klaus Piontek (ETH, Zurich) is acknowledged for solving the VP crystal structure. Lina Bettucci (Universidad de la República, Montevideo) is acknowledged for an Inocutis jamaicensis strain. M.S acknowledges MEC for a Postdoctoral Fellowship. F.J.R.-D. thanks CSIC for an I3P contract. A.G. and S.C. thank MEC for their “Ramón y Cajal” contracts.Peer reviewed