Analysis of complex gene families in the lignin-degrading basidiomycete Phanerochaete chrysosporium has been hampered by the dikaryotic nuclear condition. To facilitate genetic investigations in P. chrysosporium strain BKM-F-1767, we isolated a homokaryon from regenerated protoplasts. The nuclear condition was established by PCR amplification of five unlinked genes followed by probing with allele-specific oligonucleotides. Under standard nitrogen-limited culture conditions, lignin peroxidase, manganese peroxidase, and glyoxal oxidase activities of the homokaryon were equivalent to those of the parental dikaryon. We used the homokaryon to determine the genomic organization and to assess transcriptional effects of a family of repetitive elements. Previous studies had identified an insertional mutation, Pce1, within lignin peroxidase allele lipI2. The element resembled nonautonomous class II transposons and was present in multiple copies in strain BKM-F-1767. In the present study, three additional copies of the Pce1-like element were cloned and sequenced. The distribution of elements was nonrandom; all localized to the same 3.7-Mb chromosome, as assessed by segregation analysis and Southern blot analysis of the homokaryon. Reverse transcription-PCR (RT-PCR) showed that Pce1 was not spliced from the lipI2 transcript in either the homokaryon or the parental dikaryon. However, both strains had equivalent lignin peroxidase activity, suggesting that some lip genes may be redundant.