The extracellular enzymes from Pleurotus sajor-caju were studied for lignin degrading enzyme patterns and dye decolourisation potential. Laccases are major ligninolytic enzymes excreted by the fungus. The results from a native-PAGE revealed that there were at least two isoenzymes. The crude enzyme had a pH and a temperature optimum at 6.0 and 40°C, respectively when 2,2′-azino-bis-(3-ethylbenzothiazoline-6-sulfonic acid) (ABTS) was used as substrate. The pH and thermal stability were at 5.0 and 30°C. The pH optima for decolourisation of Indigo Carmine and Methyl Red were at 5.0 and 6.0, respectively. Indigo Carmine could be decolorized efficiently above 90% within 180 min, whereas Methyl Red could be decolorized only 3.5%. High efficiency decolourisation of Indigo Carmine makes this fungus to be a promise choice in biological treatment of waste water containing Indigo Carmine.