Chloromethane (CH(3)Cl), a gaseous natural product released as a secondary metabolite by many woodrotting fungi of the family Hymenochaetaceae, has been shown to act as a methyl donor for biosynthesis of methyl esters of benzoic and furoic acid in the primary metabolism of Phellinus pomaceus. The broad-specificity methylating system could esterify a wide range of aromatic and aliphatic acids. In addition to CH(3)Cl, both bromo- and iodomethanes acted as methyl donors. Methylation did not appear to proceed via methanol or a coenzyme A intermediate. The initial growth-related accumulation of methyl benzoate during culture of P. pomaceus was paralleled by an increase in activity of the methylating system in the mycelium. Changes in percent incorporation of CH(3) from exogenous CH(3)Cl during growth indicated that although utilization of CH(3)Cl was initially closely coupled to biosynthesis of the compound, the system became less tightly channeled later in growth. This phase coincided with release of gaseous CH(3)Cl by the fungus. A biochemically distinct CH(3)Cl-utilizing system capable of methylating phenols and thiophenol was also identified in the fungus, but in contrast with the carboxylic acid-methylating system, it attained maximum activity in the idiophase. Preliminary investigations of a non-CH(3)Cl-releasing fungus, Fomitopsis pinicola, have shown the presence of a CH(3)Cl-utilizing system capable of methylating benzoic acid, suggesting that CH(3)Cl biosynthesis may occur in non-hymenochaetaceous fungi. Halogenated compounds hitherto found in nature are mainly stable end products of metabolism. The participation of CH(3)Cl in primary fungal metabolism demonstrates that some halometabolites may have a previously unrecognized role as intermediates in the biosynthesis of nonhalogenated natural products.