The biodegradation of cellulose involves the enzymatic action of cellulases (endoglucanases), cellobiohydrolases (exoglucanases), and beta-glucosidases that act synergistically. The rate and efficiency of enzymatic hydrolysis of crystalline cellulose in vitro decline markedly with time, limiting the large-scale, cost-effective production of cellulosic biofuels. Several factors have been suggested to contribute to this phenomenon, but there is considerable disagreement regarding the relative importance of each. These earlier investigations were hampered by the inability to observe the disruption of crystalline cellulose and its subsequent hydrolysis directly. Here, we show the application of high-resolution atomic force microscopy to observe the swelling of a single crystalline cellulose fiber and its-hydrolysis in real time directly as catalyzed by a single cellulase, the industrially important cellulase 7B from Trichoderma reesei. Volume changes, the root-mean-square roughness, and rates of hydrolysis of the surfaces of single fibers were determined directly from the images acquired over time. Hydrolysis dominated the early stage of the experiment, and swelling dominated the later stage. The high-resolution images revealed that the combined action of initial hydrolysis followed by swelling exposed individual microfibrils and bundles of microfibrils, resulting in the loosening of the fiber structure and the exposure of microfibrils at the fiber surface. Both the hydrolysis and swelling were catalyzed by the native cellulase; under the same conditions, its isolated carbohydrate-binding module did not cause changes to crystalline cellulose. We anticipate that the application of our AFM-based analysis on other cellulolytic enzymes, alone and in combination, will provide significant insight into the process of cellulose biodegradation and greatly facilitate its application for the efficient and economical production of cellulosic ethanol.