The main objective of the study was to characterize the phenolic compounds released during the degradative action of fresh water cyanobacterium on coir pith. The major lignolytic enzymes, laccase and polyphenol oxidase and accessory enzyme esterase, expressed induction on exposure to the lignocellulosic material. Spectral analysis, thin layer chromatography and high performance liquid chromatography results coincided with the standard chemicals- guaiacol and 4-hydroxy benzaldehyde. The results showed that this freshwater cyanobacterium, Phormidium sp. BDU-5 can be used as a driving force to release industrially important phenolic compounds from lignocellulosic waste like coir pith, avoiding chemical delignification, pollution and above all oxygenating the environment during the degradation process. Coir pith, a lignocellulosic waste, which is dumped in ton every year, can be utilized as a natural and cheap source for industrially important compounds like guaiacol and 4- hydroxybenzaldehyde.