Strain improvement and morphology investigation in bioreactor cultures were undertaken in suspended cultures of Phellinus linteus mycelia for mass production of protein-bound polysaccharides(soluble β-D-glucan), a powerful immuno-stimulating agent. Phellineus sp. screened for this research was identified as Phellinus linteues through ITS rDNA sequencing method and blast search, demonstrating 99.7% similarity to other Phellinus linteus strains. Intensive strain improvement program was carried out by obtaining large amounts of protoplasts for the isolation of single cell colonies. Rapid and large screening of high-yielding producers was possible because large numbers of protoplasts (1×10^(5)~10^(6) protoplasts/ml) formed using the banding filtration method with the cell wall-disrupting enzymes could be regenerated in relatively high regeneration frequency(10^(-2)~10^(-3)) in the newly developed regeneration medium. It was demonstrated that the strains showing high performances in the protoplast regeneration and solid growth medium were able to produce 5.8~6.4%(w/w) of β-D-glucan and 13~15 g/L of biomass in stable manners in suspended shake-flask cultures of P. linteus mycelia. In addition, cell mass increase was observed to be the most important in order to enhance β-D-glucan productivity during the course of strain improvement program, since the amount of β-D-glucan extracted from the cell wall of P. linteus mycelia was almost constant on the unit biomass basis. Therefore we fully investigated the fungal cell morphology, generally known as one of the key factors affecting cell growth extent in the bioreactor cultures of mycelial fungal cells. It was found that, in order to obtain as high cell mass as possible in the final production bioreactor cultures, the producing cells should be proliferated in condensed filamentous forms in the growth cultures, and optimum amounts of these filamentous cells should be transferred as active inoculums to the production bioreactor. In this case, ideal morphologies consisting of compacted pellets less than 0.5mm in diameter were successfully induced in the production cultures, resulting in shorter period of lag phase, 1.5 fold higher specific cell growth rate and 3.3 fold increase in the final biomass production as compared to the parallel bioreactor cultures of different morphological forms. It was concluded that not only the high-yielding but also the good morphological characteristics led to the significantly higher biomass production and β-D-glucan productivity in the final production cultures.