One of natures most important biological processes is the degradation of lignocellulosic materials to carbon dioxide, water and humic substances. This implies possibilities to use biotechnology in the pulp and paper industry and consequently, the use of microorganisms and their enzymes to replace or supplement chemical methods is gaining interest. This chapter describes the structure of wood and the main wood components, cellulose, hemicelluloses and lignins. The enzyme and enzyme mechanisms used by fungi and bacteria to modify and degrade these components are described in detail. Techniques for how to assay for these enzyme activities are also described. The possibilities for biotechnology in the pulp and paper industry and other fiber utilizing industries based on these enzymes are discussed.