Superior lignocellulolytic microbes are useful for efficient bioconversion of plant biomass. Eight fungal strains were isolated from compost and forest litter of an Indo-Burma Biodiversity hotspot and were evaluated for their lignolytic and cellulolytic capabilities. X-ray diffraction (XRD) study was performed to test their effect on cellulose crystallinity of rice straw. Scanning electron spectroscopic (SEM) and Fourier transform-infrared (FT-IR) spectroscopic analysis were performed to study the surface morphology and chemical changes occurred in the fungi treated rice straw, respectively. The fungus Fusarium equiseti strain TWRF-10 showed endoglucanase, exoglucanase, and endoxylanase activity of 99.19, 87.39, and 166.81 IU g(-1) rice straw, respectively, whereas Penicillium simplicissimum strain TRF-27 showed laccase and Mn peroxidase activity of 248.53 and 168.5 IU g(-1) rice straw, respectively. The strain TRF-27 caused a 65% reduction in cellulose crystallinity. These strains should be further tested for industrial use.