Lignocellulose is the predominant renewable resource. It uses include fuel, as the feedstock for the pulp and paper industry, and for animal nutrition. It also constitutes a large proportion of agricultural and urban waste. Biotechnology has roles in its efficient production and utilisation. The types of lignin substrates available for study of lignin biodegradation are described. The white rot fungus Phanerochaete chrysosporium is the archetypal system for the study of lignocellulose degradation, since it mineralises lignin and degrades both cellulose and hemicellulose. The salient features of the P. chrysosporium system are described. The lignin peroxidases are a family of proteins, and it is shown that expression of their genes is differential. P. chrysosporium is heterokaryotic with two gene equivalents that have abundant RFLPs. A set of basidiospore-derived strains with genetic compositions defined by such RFLPs provided the potential basis for a strain improvement programme for lignin degradation. However, analysis of this system using radiolabelled synthetic lignin (DHP) as the substrate confirmed previous evidence that both the substrate and the fungal cultures displayed much variation, so that it was difficult to quantify performance for this property. The cellobiohydrolase I enzymes are also coded for by a family of genes, and evidence is also presented for allelic variants, for differential expression and for differential splicing. In contrast, the cellobiohydrolase II function is encoded at a unique genetic locus. Approaches to an homologous integrative transformation system are discussed. Some actinomycete bacteria represent an alternative system for lignin solubilisation in which strains differ in their spectra of activities on lignocellulose substrates. The xylanase system of Streptomyces cyaneus is shown to include three enzymes, two of which are inducible by xylan. A novel assay method was developed and used to demonstrate that the third is constitutive and also non-repressible by glucose. It is proposed that this acts as a sensor for xylans in the environment that can yield breakdown products that are taken up and can then act as inducers of the other two enzymes. The studies on microbial lignocellulose degradation from different laboratories have allowed the formulation of specific biotechnological goals, and some of the problems and opportunities in this area are identified.