The ability of wood rotting fungus, Phanerochaete chrysosporium to decolourise azo dye, Acid Red -18 was investigated. The optimal parameters (pH and cell load) required for effective decolourisation were determined. The strain was capable of decolourising dye over a pH range of 4-6 and decolourisation was rather fast, more than 90% in all cases. The optimal pH 5 and cell load of 2.4 x 10(6) spores/mL is required for complete decolourisation of 100 micromol of azo dye Acid Red-18 at a temperature of 37 degrees C. The fungus proved to be capable of both biodegradation and biosorption, and biosorption was found to be the major dye removal mechanism.