Summary It is not definitively known whether or not the production of extracellular hydrogen peroxide (H2O2) is a universal characteristic of brown-rot fungi. Cytochemical localization of H2O2 was tested in two brown-rot fungi, Tyromyces palustris and Coniophora puteana, by staining with cerium chloride. Transmission electron microscopy (TEM) showed the deposition of cerium perhydroxide within the fungal hyphae as well as wood cell walls affected by brown-rot fungi. TEM work indicated that extracellular H2O2 was present in brown-rot fungi and that H2O2 from brown-rot fungi diffused into the wood cell walls in the early stages of decay. The present work strongly suggests that H2O2 plays an important role in the early degradation of cellulose by brown-rot fungi. The usefulness of this technique for localizing H2O2 at high resolution with minimal nonspecific deposition is also discussed.