Pleurotus sajor-caju, an edible white-rot fungi showed laccase activity when grown on sterilized sago 'hampas' supplemented with mineral nutrients. The laccase (EC 1.10.3.2) activity was influenced significantly by the inoculum, age and density during solid substrate fermentation of sago 'hampas'. Pleurotus sajor-caju also showed varied growth profiles on potato-dextrose agar plates supplemented with ferulic acid, vanillin and 2,5-xylidine. The induction of laccase was highest between days six and eight after inoculation with 10% (w/w) four-week old inoculum supplemented with either 0.2 mM of ferulic acid or 0.2 mM, of vanillin. The pH and temperature optima of the P. sajor-caju laccase activity were 6.0 and 50°C, respectively. The enzyme was inhibited by sodium azide, methanol (100%), acetone (100%) and was least inhibited by EDTA and CTAB. The projected economics of laccase production based on the findings of this study is also discussed. © 1997 Elsevier B.V. All rights reserved.