It has been suggested that the host specificity exhibited by some lichenicolous fungi depends on their ability to tolerate the secondary chemistry of potential host lichens. For example, the lichen parasite Marchandiomyces corallinus is able to degrade the tissues of the lichen Flavoparmelia baltimorensis irrespective of the presence or absence of endogenous phenolic compounds. In contrast, the degradation of tissues from the lichen Lasallia papulosa is suppressed when endogenous phenolics are not removed. We have investigated the physiological basis of this inhibition in order to understand more about how lichen chemistry infiuences host preference in lichenicolous fungi. Results showed that the secondary compounds from L. papulosa inhibit the overall growth of M. corallimis, but not the catalytic activity of its tissue-degrading polysaccharidases. This effect is different from that shown by another lichen parasite, Nectria parmeliae, where lichen compounds specifically inhibited polysaccharidase activity. Compared with the compounds of L. papulosa, the endogenous phenolics of F. baltimorensis inhibited the growth of M. corallimis substantially less and exhibited little or no inhibition of polysaccharidases. For M. corallimis, host preference appears to be associated with physiological adaptation to the chemistry of F. baltimorensis.