A novel inulinolytic microorganism, Xanthomonas sp. produced an endoinulinase, to be used for inulooligosaccharide (IOS) formation from inulin, at an activity of 11 units ml(-1) (1.2 mg protein ml(-1)). The endoinulinase was optimally active at 45 degrees C and pH 6.0. Batchwise production of IOS was carried out by the partially purified endoinulinase with a maximum yield of about 86% on a total sugar basis with 10 g inulin l(-1). The major IOS components were DP (degree of polymerization) 5 and 6 with trace amount of smaller oligosaccharides.