Peroxidase has been thought to be the only enzyme that oxidizes monolignol precursors to initiate lignin formation in plants. A laccase was purified from cell walls of differentiating xylem of loblolly pine and shown to coincide in time and place with lignin formation and to oxidize monolignols to dehydrogenation products in vitro. These results suggest that laccase participates in lignin biosynthesis and therefore could be an important target for genetic engineering to modify wood properties or to improve the digestibility of forage crops.