A novel alcohol oxidase (AOX) has been purified from mycelial pellets of the wood-degrading basidiomycete Gloeophyllum trabeum and characterized as a homooctameric nonglycosylated protein with native and subunit molecular masses of 628 and 72.4 kDa, containing noncovalently bonded flavin adenine dinucleotide. The isolated AOX cDNA contained an open reading frame of 1,953 bp translating into a polypeptide of 651 amino acids displaying 51 to 53% identity with other published fungal AOX amino acid sequences. The enzyme catalyzed the oxidation of short-chain primary aliphatic alcohols with a preference for methanol (K(m) = 2.3 mM, k(cat) = 15.6 s(-1)). Using polyclonal antibodies and immunofluorescence staining, AOX was localized on liquid culture hyphae and extracellular slime in sections from degraded wood and on cotton fibers. Transmission electron microscopy immunogold labeling localized the enzyme in the hyphal periplasmic space and wall and on extracellular tripartite membranes and slime, while there was no labeling of hyphal peroxisomes. AOX was further shown to be associated with membranous or slime structures secreted by hyphae in wood fiber lumina and within the secondary cell walls of degraded wood fibers. The differences in AOX targeting compared to the known yeast peroxisomal localization were traced to a unique C-terminal sequence of the G. trabeum oxidase, which is apparently responsible for the protein's different translocation. The extracellular distribution and the enzyme's abundance and preference for methanol, potentially available from the demethylation of lignin, all point to a possible role for AOX as a major source of H(2)O(2), a component of Fenton's reagent implicated in the generally accepted mechanisms for brown rot through the production of highly destructive hydroxyl radicals.