Since fossil fuel resources are limited there is a necessity to produce alternative types of fuel that are renewable and eco-friendly. Basidiomycetes are potential sources of enzymes that can be used for biofuel production. The current study aimed to isolate basidiomycetes from Sri Lanka, screen them for lignocellulose degrading enzymes, namely cellulase, xylanase, laccase, Mn peroxidase and lignin peroxidase and study the effect of potential inducers of laccase production. Among the eighteen basidiomycetes isolated, Pycnoporus sp. produced the highest cellulase activity (0.23 FPU/ml) whereas Phlebiopsis sp. produced the highest xylanase activity (5.4 U/ml). Earliella scabrosa produced the highest laccase (91.2 U/l) and Mn peroxidase (17.5 U/l) activities. Lignin peroxidase activity was not detected from the isolates. Effect of alkali lignin, Cu 2+ and rice bran, three potential inducers, on laccase production by E. scabrosa, Pycnoporus sp. and Trametes hirsuta (M40) was studied. Results indicated that alkali lignin (2 g/l) significantly increased laccase production from Pycnoporus sp. and T. hirsuta (M40) while Cu 2+ increased laccase production from E. scabrosa and T. hirsuta at 200 µM. Use of rice bran (10 g/l) resulted in higher laccase production from E. scabrosa and Pycnoporus sp. High laccase activity (79600 U/l) was obtained from E. scabrosa by using 50 g/l of rice bran and by extending the incubation period to 18 days. The study concluded that some of the basidiomycetes isolated can produce significant lignocellulose degrading enzyme activities.