Biodegradation of lignocellulosic waste by Aspergillus terreus is reported for the first time. This isolate produced 250 CMCase (carboxymethyl cellulase or endoglucanase) U.ml−1and biodegraded hay and straw during 3 days and the biomass production on straw was 5g.L−1dry weight from 0.25 cm2inoculated mycellium. This strain secreted endocellulases and exocellulases in the culture medium, but some of the enzymes produced, remained cell membrane bound. Cell bound enzymes were released by various treatments. The highest amount of endoglucanase and exoglucanase was released when the cells were treated with sonication. Aspergillus terreus was added to two tanks containing sugar wastewater and pulp manufacturing waste, as a seed for COD removal. This fungus reduced the COD by 40–80 percent, also, ammonia was reduced from 14.5 mM to 5.6 mM in sugar beet wastewater. The effects of crude enzyme of this fungus for COD removal was studied.