Thermoactinomyces thalophilus produced cellulase free extracellular endo-1,4-beta -xylanase (EC 3.2.1.8) at 50 degreesC and pH 8.5. Maximum xylanase production was thieved in fermentation medium using birchwood xylan as substrate after 96 h of growth at 50 degreesC. Other agricultural substrates such as wheat bran, wheat straw, sugarcane bagnsse and cornstover produced less xylanase, The crude enzyme preparation from mutant T. thalophilus P2 grown under optimised fermentation conditions showed no cellulase contamination and maximum xylanase activity of 42 U/ml at 65 degreesC and pH 8.5-9.0. This enzyme with initial sylanase activity of 42 U/ml was found thermostable up to 65 degreesC and retaining 50% of its activity after its incubation for 125 min at 65 degreesC.