Colour removal from phenolic industrial effluents by phenol oxidase enzymes and white-rot fungi was compared. Soluble laccase and horseradish peroxidase (HRP) removed colour from pulp mill (E), cotton mill hydroxide (OH) and cotton mill sulphide (S) effluents, but rapid and irreversible enzyme inactivation took place. Entrapment of laccase in alginate beads improved decolorization by factors of 3.5 (OH) and 2 (E); entrapment of HRP improved decolorization by 36 (OH), 20 (E) and 9 (S). Beads were unsuitable for continuous use because the enzymes were rapidly released into solution. Co-polymerization of laccase or HRP with L-tyrosine gave insoluble polymers with enzyme activity. Entrapment of the co-polymers in gel beads further increased the efficiency of decolorization of E by 28 (laccase) and by 132 (HRP) compared with soluble enzymes. Maximum decolorization of all three effluents by batch cultures of Coriolus versicolor (70%-80% in 8 days) was greater than the maximum enzymic decolorization (48% of OH in 3 days by entrapped laccase). Soluble laccase (222 units m1-1) precipitated 1.2 g 1-1 phenol from artificial coal conversion effluent at pH 6.0 and the rate of precipitation and enzyme inactivation was faster at pH 6.0 than at pH 8.5.