Skin darkening results as a consequence of the accumulation of skin pigment melanin. To combat this, the amplitude of skin lightening agents are commercially available, most of which inhibit melanin synthesis. Decolorization of melanin is an alternative method of skin lightening. In this study, we show that lignin peroxidase (LiP), an extracellular enzyme purified from Phanerochaete chrysosporium NK-1 isolated from a forest soil can effectively degrade and decolorize melanin in vitro. Decolorization conditions including pH, temperature, incubation time, enzyme concentration, and mediator addition were investigated to optimize the reaction conditions. The results indicate that pH 3, 40 °C, 15 IU/ml, and 10 h incubation were the optimal conditions for the decolorization of the melanin. The use of the mediator, veratryl alcohol was also found effective to enhance the efficacy of the melanin decolonization, with up to 92% decolorization. The scanning electron microscopy results showed void spaces on the treated melanin granules as compared to the untreated sample, indicating the degradation of melanin. Changes in the fingerprint region of the melanin were observed. Between wavenumbers 1500-500 cm-1, for example, the presence of new peaks in the treated melanin at 1513, 1464, and 1139 cm-1 CH2, CH3 bend and C-O-C stretch represented structural changes. A new peak at 2144 cm-1 (alkynyl C≡C stretch) was also detected in the decolorized melanin. The cytotoxicity study has shown that the treated melanin and LiP have low cytotoxic effects; however, the mediator of veratryl alcohol could result in high mortality which suggests that its use should be meticulously tested in formulating health and skincare products. The findings of the study suggest that LiP produced by Phanerochaete chrysosporium has the potential to be used in the medical and cosmetic industries, particularly for the development of biobased cosmetic whitening agents.