Microbial technology offers new approaches to utilizing wood in the forest products industry as well as providing new ways to protect wood against deterioration. White rot fungi have great potential as biopulping and biobleaching agents in the paper making industry and also provide innovative approaches for treatment o f waste effluents. Selective delignification of woody substrates dramatically increases digestibility and the resulting wood becomes an excellent ruminant feed. The use of low quality hardwoods and wood residues to cultivate edible mushrooms also is becoming increasingly important. A continuing challenge exists in the development o f environmentally safe wood preservatives. Biological control o f wood destroying fungi and new nontoxic chemicals need evaluation and refinement. Knowledge o f how fungi attack wood is incomplete and there is a need for a more comprehensive understanding o f wood degradation processes. The ultrastructural and chemical aspects o f microbial degradation o f wood are reviewed in this paper.