Paenibacillus sp. 598K produces cycloisomaltooligosaccharides (CIs) in culture from dextran and starch. CIs are cyclic oligosaccharides consisting of seven or more alpha-(1 -> 6)-linked-d-glucose residues. The extracellular enzyme CI glucanotransferase (PsCITase), which is the member of glycoside hydrolase family 66, catalyzes the final stage of CI production and produces mainly cycloisomaltoheptaose. We have discovered a novel intracellular CI-degrading dextranase (PsDEX598) from Paenibacillus sp. 598K. The 69.7-kDa recombinant PsDEX598 does not digest isomaltotetraose or shorter isomaltooligosaccharides, but digests longer ones of at least up to isomaltoheptaose. It also digests oligoCIs of cycloisomaltoheptaose, cycloisomaltooctaose, and cycloisomaltononaose better than it does with megaloCIs of cycloisomaltodecaose, cycloisomaltoundecaose, and cycloisomaltododecaose, as well as an alpha-(1 -> 6)-d-glucan of dextran 40. PsDEX598 is produced intracellularly when culture medium is supplemented with cycloisomaltoheptaose or dextran, but not with isomaltooligosaccharides (a mixture of isomaltose, isomaltotriose, and panose), starch, or glucose. The whole genomic DNA sequence of the strain 598K implies that it harbors two genes for enzymes belonging to glycoside hydrolase family 66 (PsCITase and PsDEX598), and PsDEX598 is the only dextranase in the strain. PsDEX598 does not have any carbohydrate-binding modules (CBMs) and has a low similarity (< 30%) with other family 66 dextranases, and the catalytic amino acids of this enzyme are predicted to be Asp191, Asp303, and Glu368. The strain Paenibacillus sp. 598K appears to take up CI-7, so these findings indicate that this bacterium can degrade CIs using a dextranase within the cells and so utilize them as a carbon source for growth.