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Advances in our understanding of the decomposition processes in forest ecosystems over the past three decades have demonstrated the importance of lignin as a regulating factor in the decomposition of leaf litter. Consequently, increasingly more attention is being focused on the ecology of fungi associated with lignin decomposition. The aim of this review is to provide a critical summary of the ecology of ligninolytic fungi inhabiting leaf litter and forest floor materials. The review focuses on the following aspects of ligninolytic fungi: the taxonomic and functional diversity of ligninolytic fungi, the outcomes of interactions between ligninolytic fungi and other organisms, the activity and abundance of ligninolytic fungi measured by the production of bleached leaves and humus, the activity of ligninolytic enzymes in soil environments, the substratum and seral succession, spatial and temporal patterns in both mycelial abundance and species distribution, and the effect of environmental factors such as nitrogen deposition and global environmental changes on ligninolytic fungi. This review integrates the ecology, diversity, and activity of ligninolytic fungi into the context of an ecosystem in order to provide an understanding of the roles of ligninolytic fungi in decomposition processes.