RV.F1.90, a potent lignin degrading fungi was characterized in detail with respect tomicroscopic morphology, growth curve, optimization of growth parameters including degradation and color reduction in media containing varying concentration of paper kraft liquor and pure commercial lignin. The kraft effluent prepared in the laboratory was characterized with respect to pH, solids, BOD, COD, color, phenolics, lignins and tannins. Influence of parameters such as the concentration of lignins in kraft effluent pure commercial lignin, pH, temperature, aeration, static vs. shaking, carbon source, nitrogen source (organic and inorganic) and in oculum concentration on break down of lignins and poly phenols, biomass and color reduction was studied. The growth of RV.F1 was very rapid with sharp fall in pH within 18 to 20 hours. Color reduction was proportional to the decrease in concentration of kraft liquor and commercial lignin. Shaking and high temperature had an adverse effect on deco lorization and build up of biomass while static incubation showed 94% color removal and biomass of 11.3 g/l. Glucose and peptone increased the rate of growth of organism and utilization of lignin significantly. The biodegradation and color removal was rapid and closely associated with primary metabolism of the fungal culture.