Ten different strains of Thermomyces lanuginosus, isolated from composting soils were found to produce phytase when grown on PSM medium. The wild type strain CM was found to produce maximum amount ofphytase (4.33 units/g DW substrate). Culturing T. lanuginosus strain CM on medium containing wheat bran and optimizing other culture conditions (carbon source, media type, nitrogen source, level of nitrogen, temperature, pH, inoculum age, inoculum level and moisture), increased the phytase yield to 13.26 units/g substrate. This culture was further subjected to UV mutagenesis for developing phytase hyperproducing mutants. The mutant (TL-7) showed 2.29-fold increase in phytase activity as compared to the parental strain. Employing Box-Behnken factor factorial design of response surface methodology resulted in optimized phytase production (32.19 units/g of substrate) by mutant TL-7. A simple two-step purification (40.75-folds) ofphytase from mutant TL-7 was achieved by anion exchange and gel filtration chromatography. The purified phytase (approximately 54 kDa) was characterized to be optimally active at pH 5.0 and temperature 70 degrees C, though the enzyme showed approximately 70% activity over a wide pH and temperature range (2.0-10.0 and 30-90 degrees C, respectively). The phytase showed broad substrate specificity with activity against sodium phytate, ADP and riboflavin phosphate. The phytase from T. lanuginosus was thermoacidstable as it showed up to 70% residual activity after exposure to 70 degrees C at pH 3.0 for 120 min. The enzyme showed Km 4.55 microM and Vmax 0.833 microM/min/mg against sodium phytate as substrate.