Whole cells of the basidiomycete fungus Phanerochaete chrysosporium (ATCC 20696) were applied to induce the biomodification of lignin in an in vivo system. Our results indicated that P. chrysosporium has a catabolic system that induces characteristic biomodifications of synthetic lignin through a series of redox reactions, leading not only to the degradation of lignin but also to its polymerization. The reducing agents ascorbic acid and α-tocopherol were used to stabilize the free radicals generated from the ligninolytic process. The application of P. chrysosporium in combination with reducing agents produced aromatic compounds and succinic acid as well as degraded lignin polymers. P. chrysosporium selectively catalyzed the conversion of lignin to succinic acid, which has an economic value. A transcriptomic analysis of P. chrysosporium suggested that the bond cleavage of synthetic lignin was caused by numerous enzymes, including extracellular enzymes such as lignin peroxidase and manganese peroxidase, and that the aromatic compounds released were metabolized in both the short-cut and classical tricarboxylic acid cycles of P. chrysosporium. In conclusion, P. chrysosporium is suitable as a biocatalyst for lignin degradation to produce a value-added product.