The have been many reports that phenoloxidase are correlated with development in many fungi. C. congregatus, one of nushroom-forming basidiomycetes, which requires light for its development also has phenoloxidases. In C. congragatus, there are two sets of membrane-associated phenoloxidase (PHO I and PHO II) which are differentiated by their isozyme patterns, and each enzyme set consists of two different subtrate specific enzyme protein; o-tolidine reacting enzyme, and DOPA reacting enzyme. PHO I which is localized by a protoplast-concanavalin A technique by using a new solidifying agent, Pluronic Polyol F 127, instead of agar appears in the vegetative hyphae, and PHO II appears at the early primordial stage on agar and at the sclerotial stage of liquid shake cultures. Inhibition of PHO I with the enzyme inhibitors inhibits mushroom formation as well as melanization of the vegetative hyphae at concentrations which do not inhibit the vegetative growth. PHO I deficient mutants do not form mushrooms or melanins, and the mutants show abnormal nuclear migration patterns. PHO II has roles; possibly cementing the adjacent hyphae during the actual three dimensonal structure formation, and melanizing mushrooms and sclerotia. The possible roles of PHO I in the light reception complex and in melanin formation, the function of malanin, and possible roles of postulated post translational modifying enzymes which regulate the phenoloxidases, nuclear migration pattern, and self-nonself recognition mechanism are discussed.