The fungus Trametes versicolor can delignify and brighten kraft pulps. To better understand the mechanism of this biological bleaching and the by-products formed, I traced the transformation of pulp lignin during treatment with the fungus. Hardwood and softwood kraft pulps containing 14C-labelled residual lignin were prepared by laboratory pulping of lignin-labelled aspen and spruce wood and then incubated with T. versicolor. After initially polymerizing the lignin, the fungus depolymerized it to alkali-extractable forms and then to soluble forms. Most of the labelled carbon accumulated in the water-soluble pool. The extractable and soluble products were oligomeric; single-ring aromatic products were not detected. The mineralization of the lignin carbon to CO2 varied between experiments, up to 22% in the most vigorous cultures. The activities of the known enzymes laccase and manganese peroxidase did not account for all of the lignin degradation that took place in the T. versicolor cultures. This fungus may produce additional enzymes that could be useful in enzyme bleaching systems.