The heterogeneous lignocellulosic contents of oil palm empty fruit bunch (OPEFB) fiber requires the use of chemical or biological pre-treatment for further value-added applications. An effective biological pre-treatment was preferred since it is mild, low energy, substrate specific and will not generate any inhibitory chemicals that interfere enzymatic activities and fermentation process. The biological pre-treatment of OPEFB fibers by local isolate Pycnoporus sanguineus was investigated in this work to improve its biodegradability through laccase production via solid-state fermentation approach. The effects of physical parameters (temperature, inducer concentrations, substrate loading) were explored to obtain maximum laccase production by P. sanguines. Results showed that the use of extractive-free OPEFB fiber at 30 °C supplemented with 4 mM of 2,2′-azino-bis(3-ethylbenzothiazoline-6-sulphonic acid) (ABTS) and 10 g of OPEFB loading yielded laccase production that was 2.1 fold higher compared to raw OPEFB. The changes of chemical and surface structures of raw, chemicals and laccase treated OPEFB were reported from Fourier-transform infrared spectroscopy (FTIR), thermogravimetric (TGA) and scanning electron microscopy (SEM) analyses. The simulated techno-economic analysis suggested economic feasibility of a batch bio-refinery for laccase production in an industrial scale feed at a maximum rate of 50 tons OPEFB/batch. From the simulated baseline study, the cost price forecast for laccase production was 14.26 US$/kg owing to the capital (65.87%) and raw materials costs (31.68%). This study reveals the potential of P. sanguineus to be used not only in biorefinery industry but also in biopulping, biobleaching (in textile and paper industries) and degrading phenolic waste (dye, colorant, pesticide waste).