Brown-rot fungi represent one of the most economically important groups of wood decay microorganisms. Some accounts estimate that as high as 80% of all in-service wood decay is caused by brown-rot fungi. Current wood preservatives protect wood by means of broad spectrum biocides. Understanding the precise mechanism of brown-rot decay would permit development of targeted wood preservatives. A non-degradative strain of Postia placenta (ME-20) was studied to obtain information on defects in key decay mechanisms which prevent colonization, weight loss and hydrolysis of wood components, especially cellulose. The major defects of the monokaryon strain ME-20 are: 1) non-accumulation of oxalic acid on cellulose and wood; 2) nonfibrillar hyphal sheath; 3) failure to translocate iron into wood in soil block tests; and 4) inability to degrade pit membranes. The failure to produce oxalic acid in the presence of pectin or cellulose or to degrade cellulose (wood or cotton) appear to be key characteristics of this nondegradatlve isolate.