An engineered cDNA from Phanerochaete chrysosporium encoding both the mature and pro-sequence regions of Lip isoenzyme H8 (Lip) has been successfully overexpressed in Escherichia coli. The recombinant protein (LipP*) was sequestered in inclusion bodies. The reduced-denatured polypeptide has been purified by differential solubilization, and the active enzyme recovered after controlled in vitro refolding (albeit in low yield), by glutathione-mediated oxidation of disulphides, in a folding medium containing an intermediate concentration of urea, Ca2+, and haem. The procedure is analogous to that previously described for the production of active recombinant horseradish peroxidase (HRP-C*) from inclusion-body material. It is quite possible, therefore, that this type of procedure may be suitable for the recovery of most, if not all, active recombinant peroxidases. The resultant LipP* has spectral characteristics identical with that of the native enzyme as isolated from Phanerochaete chrysosporium. Its specific activity measured in the standard veratryl alcohol (VA) assay was 39 micromol of VA oxidized/min per mg of protein, a value which compares extremely favourably with that of the native enzyme (36 micromol of VA/min per mg). Although levels of active enzyme obtained are not yet as high as in the case of HRP-C* (1% conversion of crude inactive LipP* polypeptide into pure fully active Lip), it is envisaged that further refinement of the expression/folding/activation procedures will provide sufficient protein for biophysical characterization of both the wild-type and site-directed mutants.