Extracellular laccase (benzenediol:oxygen oxidoreductase EC 126.96.36.199) from the lignin‐degrading fungus, Phlebia radiata, was shown to contain a novel combination of electron carriers as its prosthetic groups. In addition to two copper atoms per enzyme molecule, one molecule of PQQ was included as a cofactor. The EPR spectrum exhibits features of type 1 and type 2 copper atoms. In the enzymatic reaction 4 molecules of lignin model compound, coniferyl alcohol, are oxidized per molecule of oxygen reduced to water. During the reaction coniferyl alcohol is transformed to dilignols.