Abstract: Treatment of wood chips with lignin-degrading fungi prior to pulping has been shown to have great potential for mechanical as well as chemical pulping on a laboratory scale. Ceriporiopsis subvermispora, when grown on aspen or loblolly pine for 4 weeks, was found to be superior to other fungi. On aspen there was an energy savings of 47%, and an increase in burst and tear indices of 22% and 119%, respectively. With loblolly pine, energy savings amounted to 37%, while burst and tear indices increased by 41% and 54%, respectively. The weight loss was only 6%, but a decrease in optical properties had to be accepted. After sulfite cooking of wood chips pretreated for 2 weeks, the Kappa number decreased by 30% with hard- and softwood. Tensile and tear indices decreased by only 10%, while the brightness of unbleached pulp increased by 4% with birch. Information obtained by immunoelectron microscopy and differential staining led to the conclusion that the biopulping effect obtained after 2 weeks of incubation cannot be explained by the direct action of enzymes on lignin or polysaccharides. Instead, a low molecular mass agent is considered to be responsible for the biopulping effect. These results have changed the aims of biopulping from an emphasis on removing the bulk of lignin to an emphasis on a short-term process, lasting 2 weeks and yielding a low mass loss. Data on these kinetics of fungal development and the degree of asepsis will help to scale-up the process. An advanced chip pile is assumed to be the most feasible process design, rather than a controlled enclosed reactor.