Growth and subsequent decay by seven basidiomycetes in birch wood blocks was inhibited by three Scytalidium isolates. Scytalidium initially colonized the surface of the blocks and gradually overgrew the basidiomycetes. In individual wood blocks from 11 Scytalidium-basidiomycete paired treatment combinations, the basidiomycete was not inhibited throughout the entire wood block. These wood blocks demonstrated interspecific interactions and antagonism between the different fungi. The white-rot fungi responded to isolates of Scytalidium by occluding xylem cells with masses of hyphae, forming pseudosclerotial plates in the zone of initial interaction. Scytalidium appeared to gain access into portions of wood colonized by the basidiomycetes only after substantial decay had resulted by the wood decay fungus.