A genomic library of Pseudomonas fluorescens subsp. cellulosa DNA constructed in pUC18 and expressed in Escherichia coli was screened for recombinants expressing 4-methylumbelliferyl beta-D-glucoside hydrolysing activity (MUGase). A single MUGase-positive clone was isolated. The MUGase hydrolysed cellobiose, cellotriose, cellotetraose, cellopentaose and cellohexaose to glucose, by sequentially cleaving glucose residues from the non-reducing end of the cello-oligosaccharides. The Km values for cellobiose and cellohexaose hydrolysis were 1.2 mM and 28 microM respectively. The enzyme exhibited no activity against soluble or insoluble cellulose, xylan and xylobiose. Thus the MUGase is classified as a 1,4-beta-D-glucan glucohydrolase (EC 3.2.1.74) and is designated 1,4-beta-D-glucan glucohydrolase D (CELD). When expressed by E. coli, CELD was located in the cell-envelope fraction; a significant proportion of the native enzyme was also associated with the cell envelope when synthesized by its endogenous host. The nucleotide sequence of the gene, celD, which encodes CELD, revealed an open reading frame of 2607 bp, encoding a protein of M(r) 92,000. The deduced primary structure of CELD was confirmed by the M(r) of CELD (85,000) expressed by E. coli and P. fluorescens subsp. cellulosa, and by the experimentally determined N-terminus of the enzyme purified from E. coli, which showed identity with residues 52-67 of the celD translated sequence. The structure of the N-terminal region of full-length CELD was similar to the signal peptides of P. fluorescens subsp. cellulosa plant-cell-wall hydrolases. Deletion of the N-terminal 47 residues of CELD solubilized MUGase activity in E. coli. CELD exhibited sequence similarity with beta-glucosidase B of Clostridium thermocellum, particularly in the vicinity of the active-site aspartate residue, but did not display structural similarity with the mature forms of cellulases and xylanases expressed by P. fluorescens subsp. cellulosa.