Lignin is highly resistant to biodegradation and only higher fungi and some bacteria are capable of degrading the polymer via an oxidative process. This process has been studied extensively in the past twenty years, but the actual mechanism has not yet been fully elucidated. The complicated structure of the lignin polymer and major difficulties in analysis are responsible for the relatively slow progress

Lignin is found to be degraded by an enzyme lignin peroxidases produced by some fungi like Phanerochaete chrysosporium. The mechanism by which lignin peroxidase (Lip) interacts with the lignin polymer involves Veratryl alcohol (Valc). Which is a secondary metabolite of white rot fungi that acts as a cofactor for the enzyme.

In enzymology, a lignin peroxidase (EC 1.11.1.14) is an enzyme that catalyzes the chemical reaction

Thus, the two substrates of this enzyme are 1,2-bis(3,4-dimethoxyphenyl)propane-1,3-diol and H₂O₂, whereas its 3 products are 3,4-dimethoxybenzaldehyde, 1-(3,4-dimethoxyphenyl)ethane-1,2-diol, and H₂O.

This enzyme belongs to the family of oxidoreductases, specifically those acting on a peroxide as acceptor (peroxidases) and can be included in the broad category of ligninases. The systematic name of this enzyme class is 1,2-bis(3,4-dimethoxyphenyl)propane-1,3-diol:hydrogen-peroxide oxidoreductase. Other names in common use include diarylpropane oxygenase, ligninase I, diarylpropane peroxidase, LiP, diarylpropane:oxygen,hydrogen-peroxide oxidoreductase (C-C-bond-cleaving). It employs one cofactor, heme.

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