Laboratory microcosms containing litter from three tussock grasslands were used to assess the impact of grazing by a collembolan, Onychiurus procampatus, on the abundance, nutrient release, and respiration of the saprotrophic fungus, Phoma exigua. The fungal biomass and respiration rate were significantly reduced only when Collembola were present in excess of mean field densities but perhaps more typical of spatial aggregations in the soil. A high efficiency of nutrient immobilization by P. exigua was demonstrated but nutrient release was not significantly affected by the fauna. Problems associated with the use of microcosms in the simulation of field conditions are discussed.