Lentinus squarrosulus (Mont.) Singer, a basidiomycete also known as a white rot fungi, was immobilized on sodium alginate and tested for the effectiveness to degrade wood sawdust (WSD). Untreated and 0.1 M HCl-pretreated WSD samples were separately reacted in a micro-carrier bioreactor (mCBR) and the extent of degradation to form protein, glucose and ethanol was investigated. Pretreatment enhanced the production of both proteins and ethanol by average value of 72.0% over untreated WSD samples, after hydraulic retention time of 72 h. The maximum production of protein observed was 0.94 mg/ml-reaction volume and that of ethanol was 6.6 mg/ml-reaction volume, whereas glucose concentration fluctuated due to interconversion to ethanol. This report shows that L. squarrosulus (Mont.) Singer have the potentials of degrading WSD samples to important chemical compounds that are not hazardous to the environment.