BAGASSE is an agricultural by product from sugar cane after the cane is harvested and crushed to extract the juice. The utilization of bagasse as raw material for pulp and paper industry is increasing rapidly which also increasing pollution to the environment. In renewable resource to reduce chemical pollution, white rot fungi or lignin-degrading fungi was employed to contribute to remove lignin from raw materials. The aim of this investigation, is to determine the activity of white-rot fungi on bagasse as in in vivo biopulping or pretreatment by comparing the lignin content of bagasse before and after the biodegradation in different conditions. It was found that the most favorable conditions for bagasse pulping can be achieved by treatment with propylene glycol (PG) 90% under pressure for 1 h or without pressure for 2 h at the cooking temperature 150°C. The mentioned treatments gave high pulp yield, with no rejects and low kappa number. The extractive removal of bagasse (10 mesh) by steam resulted to high weight loss, acid perceptible polymeric lignin (APPL) production and low kappa number. The biological 4 weeks treatment of bagasse by Ophiostoma piliferum at 27°C increased the brightness, breaking length and tear factor of unbleached bagasse paper sheets, when compared with steam treatment. Using mixed culture of Ceriporiopsis subvermispora and O. piliferum either from one or twostage cultures for extractive removal and biodegradation of bagasse, led to the improvement the chemical pulp composition and the properties of unbleached paper sheets. One stage culture treatment increased the unbleached paper sheets properties which expressed as brightness, breaking length and tear factor by 5.6%, 0.08 km and 3.78, compared with the two-stage culture treatment results, which were 3.08%, 21.41 km and 3.69 , respectively . The mentioned results were more convenient when compared with steam extraction method. Scanning electron micrographs (SEM) revealed that the biological fibers of the produced paper sheets exhibit a cleaner surface, high flexibility, and conformability, which would be contributed to the good bonding nature