Panellus stipticus is one of several dozen species of fungi that are bioluminescent. Strains from eastern North America are typically bioluminescent, but those from the Pacific regions of North America and from other continents are not. The luminescence is localized to the edges of the gills and the junction of the gills with the stem and cap. Bioluminescence is also observable with mycelia grown in laboratory culture, and the growth conditions for optimal light production have been studied in detail. Several chemicals have been isolated and characterized that are believed to be responsible for light production.Genetic analysis has shown that luminescence is controlled by a single dominant allele. The luminescent glow of this and other fungi inspired the term foxfire, coined by early settlers in eastern and southern North America. Modern research has probed the potential of P. stipticus as a tool inbioremediation, due to its ability to detoxify various environmental pollutants.

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