To get a better insight into the ligninolytic system of Grammothele subargentea, extracellular ligninolytic enzyme activities and ability to degrade synthetic dyes as well as Eucalyptus globulus wood were assayed in cultures grown on an agar medium with Cu2+ or dyes and on E. globulus wood chips. Laccase was the only ligninolytic enzyme detected. The fungus was able to decolorize different dyes, being the highest levels of laccase activity in cultures with Brilliant Green. Cultures on wood showed both ligninolytic activity and degradative ability on lipophilic extractives. An extracellular laccase with pI 3.5 and maximal activity at pH 4.0 and 50-55 degrees C was detected on liquid cultures containing 0.6 mM Cu2+. The enzyme extract was stable at pH 6.0-7.0 and up to 60 degrees C. A laccase-mediator system using a G. subargentea laccase crude extract and 1-hydroxybenzotriazole as mediator improved the tensile strength of a paper from recycled high-kappa-number pulp. (C) 2008 Elsevier Ltd. All rights reserved.