Fungal physiology is the basis of biotope and global dispersion of fungal species. It determines the nutrients it can use, the environmental conditions it can endure and its competitive position in its ecosystem. The ability of fungi to survive in every known biotope, both natural and man-made, relies in part on their capacity to use a wide range of carbon sources. In nature, many fungi degrade polymeric carbon sources (e.g. polysaccharides, proteins, lignin) to use the monomeric components as carbon source. However, the available carbon sources vary strongly in nature, both between biotopes and in time. While some fungi have become specialists that focus on specific carbon sources or specific biotopes, others are more generalists that can grow in many biotopes and use a large variety of carbon sources. Differences in physiology may therefore also reflect species boundaries. Degradation of polymeric carbon sources occurs extracellularly by a broad range of enzymes, of which the production is tightly controlled by a network of regulators. This enables fungi to produce an enzyme mixture that is tailored specifically for the available carbon sources at any given time. The released monomeric compounds are transported into the cell and metabolized through a variety of metabolic pathways. These pathways are often co-regulated with the extracellular enzymes that release the compounds entering the pathways, resulting in a highly complex regulatory and metabolic network. To study fungal physiology in relation to natural substrates it is therefore necessary to address all these aspects of fungal biology: production of extracellular enzymes, metabolic pathways and regulators controlling the fungal response to the substrates present in the environment.