Indirect evidence has suggested that lignin peroxidase (LIP) of the white-rot fungus Phanerochaete chrysosporium catalyses oxidative decolourisation and depolymerisation of macromolecules from brown coal in vivo. In this study we show that LiP catalyses these transformations in vitro. Unmethylated (USC45 coal) and methylated (MWSC6 coal) fractions of solubilised macromolecules (Mr > 30 000) from a brown coal were treated with a semi-purified preparation of LiP isozymes from P. chrysosporium. Both coal fractions were decolourised, losing between 26% and 39% of their absorbance at both 280 nm and 400 nm, in reactions that had an absolute requirement for H2O2 and veratryl alcohol. Neither coal fraction was transformed when the enzyme was heat-inactivated or in the presence of the LiP inhibitor metavanadate. Gel-permeation chromatography showed that MWSC6 coal but not USC45 was depolymerised and yielded low-molecular-mass (Mr<30 000) fragments. Nine monomeric products were identified by GC-MS.