A beta-glucosidase with cellobiase activity was purified to homogeneity from the culture filtrate of the mushroom Termtomyces clypeatus. The enzyme had optimum activity at pH 5.0 and temperature 65 degrees C and was stable up to 60 degrees C and within pH 2-10. Among the substrates tested, p-nitrophenyl-beta-D-glucopyranoside and cellobiose were hydrolysed best by the enzyme. Km and Vm values for these substrates were 0.5, 1.25 mM and 95, 91 mumol/min per mg, respectively. The enzyme had low activity towards gentiobiose, salicin and beta-methyl-D-glucoside. Glucose and cellobiose inhibited the beta-D-glucosidase (PNPGase) activity competitively with Ki of 1.7 and 1.9 mM, respectively. Molecular mass of the native enzyme was approximated to be 450 kDa by HPLC, whereas sodium dodecyl sulphate polyacrylamide gel electrophoresis indicated a molecular mass of 110 kDa. The high molecular weight enzyme protein was present both intracellularly and extracellularly from the very early growth phase. The enzyme had a pI of 4.5 and appeared to be a glycoprotein.