Degradation of tetrachloroguaiacol is catalyzed by an extracellular enzyme, the laccase of the white-rot fungus Coriolus versicolor. This enzyme catalyzes the dechlorination of tetrachloroguaiacol and release of chloride ions. The pathway for the degradation was deduced from the intermediates produced by purified laccase and O-18-labeling experiments. The first step is demethylation. The resulting tetrachlorocatechol is dechlorinated to give 2,3,5-trichloro-6-hydroxy-p-benzoquinone, 2,5-dichloro-3,6-dihydroxy-p-benzoquinone, and dichloro-6-hydroxy-p-benzoquinone. Isotopic experiments established the mechanism of dechlorination of tetrachloroguaiacol by laccase. The laccase-catalyzed dechlorination is not caused by oxidative coupling but by nucleophilic substitution in which Cl- is released by water from cation radicals generated by laccase.