A marine fungus,Phlebia sp. MG-60, and three white-rot fungi were incubated with whole sugarcane bagasse (WSB). The residual lignin content and holocellulose content in the decayed WSB were determined, and based on their content delignification selection factors of the fungi were calculated. More than 50% of lignin in the WSB was degraded byPhlebia sp. MG-60, and less than 10% of the holocellulose was lost. The WSB was fractioned by sieving to separate long-fiber bagasse, shortfiber bagasse, and bagasse pith. WhenPhlebia sp. MG-60 was incubated with the three fractions, more efficient delignification activity on the bagasse pith was observed. As the most efficient utilization of bagasse, we predict that bagasse fiber might be employed as the raw material in the pulp and paper industry after biopulping withPhlebia sp. MG-60 and bagasse pith, or WSB might be used to produce animal feed after fermentation with the strain.