Under secondary metabolic conditions, the white-rot basidiomycete Phanerochaete chrysosporium degraded 2,7-dichlorodibenzo-p-dioxin (I). The pathway for the degradation of I was elucidated by the characterization of fungal metabolites and oxidation products generated by lignin peroxidase (LiP), manganese peroxidase (MnP), and crude intracellular cell-free extracts. The multistep pathway involves the degradation of I and subsequent intermediates by oxidation, reduction, and methylation reactions to yield the key intermediate