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Phenolic compounds are dominant pollutants in terrestrial and freshwater environmental that have toxic effects on living organisms at low concentrations, because it has the ability to persist in the ecosystem. So bio-removal is a good technique that employs the metabolic potential of microorganisms to clean up the environmental pollutants and turned into less dangerous or harmless substances. This work aims to the isolation of different species of fungi from wastewater of factories and Red Sea coast to test the ability of these fungi to degrade phenolic compounds. Ten species of fungi and sterile mycelium are used to degrade phenol and its derivatives at different concentrations (0.4%, 0.6% and 0.8%). All fungi species have the ability of degradation of phenol and their derivatives, but P. chrysogenum, Saccharomyces sp. and sterile mycelium exhibited low ability to break down of hydroxyl-benzene, 2-naphthol and 1,3 dihydroxy benzene, respectively.