A specific endo-beta-1,4-D-glucanase (Avicelase-II) resembling exo-cellobiohydrolase (CBH) was purified from Bacillus circulans F-2. Both Avicelase and carboxymethyl cellulase activity was found to reside on a monomeric protein of 72 kD. Mg2+ stabilized enzyme activity above 50 degrees C, and cysteine further enhanced the stabilizing effect of Mg2+. The enzyme exhibited hydrolyzing activities toward p-nitrophenyl-beta-D-cellobioside, xylan, and some cellodextrins. The enzyme splits off only cellobiose (G2) from microcrystalline cellulose and produced xylobiose, xylotetraose, and xylohexaose from the digestion of xylan. Hydrolysis of CM-cellulose takes place with a slow decrease in viscosity, and also with a slow liberation of reducing sugars, indicating an exoglucanase-like type of activity. However, when the enzyme’s action pattern was further evaluated using defined soluble cellodextrins (DP 2-6) as substrates, it became obvious from the TLC data that the enzyme does not exclusively split off G2 units from the oligomers. Cellotriose (G3) was cleaved into G2 and glucose. Cellotetraose (G4) was preferentially cleaved into G2. Cellopentaose (G5) yielded G2 and G3, which is slowly hydrolyzed to G2 and glucose. Cellohexaose (G6), however, was cleaved into G3, G2, and G4. Therefore, the enzyme does not act with an endo-mechanism, but acts as a specific endoglucanase resembling CBH, and we do not believe that it is a real CBH, which exclusively splits off C2 units from substrates.