The fungus Phoma herbarum isolated from soil showed growth on highly pure lignin extracted from spruce wood and on synthetic lignin (DHP). The lignin remaining after cultivation was shown to have a lower molecular weight. The reduction in the numbers of ether linkages of the extracted lignins was also observed by derivatization followed by reductive cleavage (DFRC) in combination with P-31 NMR studies. The fungal strain showed an ability to degrade synthetic lignin by extracellular catalysts. GC-MS was applied to study the evolution of low molar mass adducts, e.g., monolignols and it was shown that a reduced coniferyl alcohol product was produced from DHP in a cell-free environment. The work has demonstrated the ability of soil microbes to grow on lignin as sole carbon source. The potential impact is in the production of low molar mass renewable phenols for material application.