The white rot fungus Scytinostroma galactinum strain F361 and mutants thereof are particularly effective in selectively grading the lignin component of lignin-containing materials, particularly processed wood pulps including chemical pulps, and also particularly effective in degrading lignin degradation products such as chlorinated degraded lignin by-products as found, for example, in E-1 effluents, and also in degrading chlorine-containing aromatic compounds generally as found in aqueous waste streams containing the same.