Bleach plant effluents from the pulp and paper industry generated during bleaching with chlorine-containing chemicals are highly colored and also partly toxic due to the presence of chloroorganics, hence the need for pretreatment prior to discharge. In a rotating biological contactor (RBC) reactor effluent decolorization was studied using Coriolus versicolor, a white-rot fungus and Rhizomucor pusillus strain RM7, a mucoralean fungus. Decolorization by both fungi was directly proportional to initial color intensities. It was found that the extent of decolorization was not adversely affected by color intensity, except at the lowest level tested. It was shown that decolorization of 53 to 73% could be attained using a hydraulic retention time of 23 h. With R. pusillus, 55% of AOX were removed compared to 40% by C versicolor. Fungal treatment with both R. pusillus and C. versicolor rendered the effluent essentially nontoxic. Addition of glucose to decolorization media stimulated color removal by C. versicolor, but not with R. pusillus. Ligninolytic enzymes (manganese peroxidase and laccase) were only detected in effluent treated by C. versicolor. It seems that there are definite differences in the decoloring mechanisms between the white-rot fungus (adsorption + biodegradation) and the mucoralean fungus (adsorption). This aspect needs to be investigated in greater detail to verify the mode responsible for the decolorization activity in both types of fungi.