An enzymatic method was developed for the progressive modification of the polysaccharide schizophyllan. Fungal strains Hypocrea nigricans NRRL 62555, Penicillium crustosum NRRL 62558, and Penicillium simplicissimum NRRL 62550 were previously identified as novel sources of beta-endoglucanase with specificity towards schizophyllan. Concentrated enzyme preparations from these strains showed specific activities of 1.7-4.3 U beta-glucanase/mg protein. Using dilutions of these enzymes in time course digestions, schizophyllan was progressively modified to reduced molecular weight species. Glucose and oligosaccharides were found only in the more complete digestions, and thus modified schizophyllan can be produced quantitatively, without loss, to small molecules. Permethylation analysis confirmed that modified schizophyllan retains the fundamental linkage structure of native schizophyllan. Modified schizophyllan species showed progressively reduced viscosity profiles, and all exhibited pseudoplasticity in response to shear thinning.