A membrane-associated aromatic nitroreductase activity was identified in cell-free extracts of the lignin-degrading fungus Phanerochaete chrysosporium. The enzyme catalyzed the nitro group reduction of 1,3-dinitrobenzene, 2,4-dinitrotoluene, 2,4,6-trinitrotoluene, 1-chloro-2,4-dinitrobenzene, and 2,4-dichloro-1-nitrobenzene. The corresponding hydroxylamines and/or amines were identified as reaction products by HPLC and/or GC-MS. 1-Nitroso-3-nitrobenzene and 1-hydroxylamino-3-nitrobenzene also were reduced by the enzyme, suggesting they were intermediates in the reaction. The enzyme required NAD(P)H as a cosubstrate and the optimal pH and temperature for the reaction were 6.5 and 50 degrees C, respectively. Enzyme activity was not observed in the presence of molecular oxygen. The membrane-associated enzyme could be solubilized with the nonionic detergent Triton X-100.