The chemical effect ofMarasmius peronatuson beech litter is described, with particular reference to the ecological relation between fungus and substrate. Beech leaves, some infected, and others uninfected by this fungus, were analysed and the results compared.Analysis shows that a vital process involving loss of carbon is at work, and that the fungus decomposes lignin, converting it into soluble products by the action of exoenzymes. It is suggested that by this process it is contributing to conditions favourable for beech regeneration.The fact that this fungus can more successfully colonize hardwood litter (e.g. beech) than other types of substrate, is explained by consideration of its physiology.