Abstract. Cells of the white rot fungus Pycnoporus cinnabarinus grown in glucose were able to hydroxylate biphenyl and diphenyl ether, although growth was inhibited by these substrates at concentrations above 250M. 2- and 4-Hydroxybiphenyl were detected as products of biphenyl metabolism and 2- and 4-hydroxydiphenyl ether as products of diphenyl ether metabolism in the culture media. After addition of 2-hydroxydiphenyl ether and 2-hydroxybiphenyl to cell-free supernatants containing laccase as the only ligninolytic enzyme, different coloured precipitates were formed. HPLC analysis revealed the formation of additional hydrophobic metabolites with one major product per transformation. Mass spectrometric analysis of the methyl derivatives of the polymer mixture indicated dimers and trimers with different binding types. The main products were identified as dimers with carbon-carbon bonds in para-position to the hydroxyl group of the monomers by mass spectroscopy and nuclear magnetic resonance spectroscopy.