This research deals with the development of a novel method, named as Ergosterol Extraction Method (EEM) for the quantification and bioremediation of contaminants, especially Polycyclic Aromatic Hydrocarbons (PAHs). The novelty of this method is that it is used for the simultaneous extraction and quantification of two different types of compounds, sterol (ergosterol) and PAHs. This method is more efficient, less time consuming and non-hazardous than the usual Lipid Extraction Method (LEM). It has been very successfully used in the extraction of ergosterol from the fungus, Pleurotus ostreotus and PAHs from sediments. A noteworthy point is that cholesterol (reported only in animals) has also been detected in the fungus, Pleurotus ostreotus at easily detectable level. It is also useful for the bioremediation of contaminated river water, sediment, soil and other environmental samples very easily and economically on a large scale. Thus, it seems to be the most effective method both qualitatively and quantitatively for the simultaneous analysis of PAHs and ergosterol.