The saprotrophic wood-degrading abilities of strains from the intersterility groups S and P of the necrotrophic root and white rot fungus Heterobasidium annosum were tested using a conventional soil jar method and small wood blocks of Pinus sylvestris, Picea abies and Betula verrucosa. Weight loss in dry matter of wood blocks was compared with the ability of the same strains to secrete the phenol oxidase laccase under liquid and solid-state culture conditions. Results showed the much greater ability of H. annosum P strains to degrade wood, with weight losses comparable to those reported for other white rot fungi cultivated under similar conditions. In contrast, the S isolates except Br228 and Fr154 degraded the wood blocks poorly with a maximum weight loss of ca 12% recorded after 5 mo incubation. Light and scanning electron microscopy showed hyphal colonization and decay to be typical for white rot, with both simultaneous attack by cell wall thinning and preferential lignin degradation recorded for P strains. Results for wood block degradation correlated well with the ability of the intersterility groups to produce laccase in liquid culture and solid-state culture conditions, with P strains producing ca 5–6 times more laccase than S strains. Results indicate that great differences exist between H. annosum intersterility P and S groups ability to cause wood decay, but that P strains have a significantly greater competitive saprotrophic wood-degrading ability than previously realized.