The extracellular endo-1,4-beta-xylanase of the yeast Cryptococcus albidus catalyzes degradation of aryl beta-xylosides by other reactions than simple hydrolytic cleavage. Liberation of phenol or p-nitrophenol from the corresponding beta-xylosides is accompanied by formation of xylose oligosaccharides and only small amounts of xylose. With the aid of phenyl beta-[U-14C]xyloside synthesized from [U-14C]xylose, it was established that the reaction followed a complex pattern with the rate of phenyl beta-xyloside digestion and appearance of various products varying markedly with time. The reaction involves multiple transglycosylic reaction leading first to phenyl glycosides of xylooligosaccharides, which are subsequently hydrolyzed mainly to xylobiose and xylotriose. At concentrations of phenyl beta-xyloside lower than 100 mM the reaction exhibited a significant lag phase, which was followed by period during which the rate of the degradation of the substrate could be determined. The rate showed a strong sigmoidal dependence on phenyl-beta-xyloside concentration. The lag phase could be eliminated and the initial rate accelerated by addition of xylose oligosaccharides, which are hydrolyzed by beta-xylanase. After disappearance of the added oligosaccharides, the reaction transitionally ceased and then resumed again at a rate comparable to the control without added oligosaccharides. It is proposed that beta-xylanase utilizes for degradation of phenyl beta-xyloside two reaction pathways differing in the nature of glycosyl donors.