Brown rot basidiomycetes initiate wood decay by producing extracellular reactive oxygen species that depolymerize the structural polysaccharides of lignocellulose. Secreted fungal hydroquinones are considered one contributor because they have been shown to reduce Fe(3+), thus generating perhydroxyl radicals and Fe(2+), which subsequently react further to produce biodegradative hydroxyl radicals. However, many brown rot fungi also secrete high levels of oxalate, which chelates Fe(3+) tightly, making it unreactive with hydroquinones. For hydroquinone-driven hydroxyl radical production to contribute in this environment, an alternative mechanism to oxidize hydroquinones is required. We show here that aspen wood undergoing decay by the oxalate producer Postia placenta contained both 2,5-dimethoxyhydroquinone and laccase activity. Mass spectrometric analysis of proteins extracted from the wood identified a putative laccase (Joint Genome Institute P. placenta protein identification number 111314), and heterologous expression of the corresponding gene confirmed this assignment. Ultrafiltration experiments with liquid pressed from the biodegrading wood showed that a high-molecular-weight component was required for it to oxidize 2,5-dimethoxyhydroquinone rapidly and that this component was replaceable by P. placenta laccase. The purified laccase oxidized 2,5-dimethoxyhydroquinone with a second-order rate constant near 10(4) M(-1) s(-1), and measurements of the H(2)O(2) produced indicated that approximately one perhydroxyl radical was generated per hydroquinone supplied. Using these values and a previously developed computer model, we estimate that the quantity of reactive oxygen species produced by P. placenta laccase in wood is large enough that it likely contributes to incipient decay.