In industrial processes, chemical catalysis is being replaced by enzyme catalysis, since the latter is environmentally benign, non-persistent and cost effective. Microbial xylanases have significant applications in textile, baking, food and feed industries, and in paper and pulp industries for reducing the chlorine requirement. The hazardous chlorine required for bleaching can be reduced up to 25-30% by including an enzymatic step in the pulp bleaching process. The paper pulp bleaching requires xylanases that are active at alkaline pH and elevated temperatures. The enzymes from the cultured microbes do not perform optimally in the paper industry due to their inadequate stability under the process conditions of high temperature and alkaline pH. This review, therefore, deals with the rationale of molecular approaches such as protein engineering for designing xylanases with improved characteristics to suit the process conditions in industries, and prospects and problems. (C) 2012 Elsevier Ltd. All rights reserved.