Different effluent streams of a small pulp mill utilizing agriresidues were characterized for their pollution load and were decolorized with the white rot fungus Trametes versicolor strain B7. The fungus was used in the form of pellets, allowing its use in large amounts and eliminating the problem of recycling the biomass. The mycelial pellets could decolorize the effluent in the presence of any of the cosubstrates sucrose, glucose, starch, ethanol, carboxymethyl-cellulose, pulp, and bagasse pith. The optimum pH and temperature rt ere found to be 4.5-5.0 and 25 degrees-35 degrees C, respectively. With an effluent of 18,500 color units, the maximum color reduction of 92% with a chemical oxygen demand reduction of 69% was obtained.