Transmissible hypovirulence of the chestnut blight fungus, Cryphonectria parasitica, is associated with cytoplasmic double-stranded-RNA (dsRNA) viruses. The fungal laccase has attracted interest because its activity is reduced in hypovirulent dsRNA-containing strains. A laccase cDNA clone was isolated by screening a cDNA expression library with antibodies against the purified extracellular laccase. The amino acid sequence deduced from part of the cDNA clone revealed high homology to other fungal laccases, especially to the Neurospora crassa laccase. A major laccase transcript 2.3 kb in length was detected in Northern (RNA) blots. In liquid culture, extracellular laccase activity was reduced by about 75% in the hypovirulent (dsRNA-free) strain EP155/2. In contrast, production of biomass was not affected by the dsRNA. Northern blot analysis indicated that dsRNA down regulates laccase biosynthesis by reducing laccase mRNA accumulation. The laccase gene is one of several developmentally regulated genes affected by the presence of dsRNA.