Novel information on the structure and function of chitosanase, which hydrolyzes the beta-1,4-glycosidic linkage of chitosan, has accumulated in recent years. The cloning of the chitosanase gene from Streptomyces sp. strain N174 and the establishment of an efficient expression system using Streptomyces lividans TK24 have contributed to these advances. Amino acid sequence comparisons of the chitosanases that have been sequenced to date revealed a significant homology in the N-terminal module. From energy minimization based on the X-ray crystal structure of Streptomyces sp. strain N174 chitosanase, the substrate binding cleft of this enzyme was estimated to be composed of six monosaccharide binding subsites. The hydrolytic reaction takes place at the center of the binding cleft with an inverting mechanism. Site-directed mutagenesis of the carboxylic amino acid residues that are conserved revealed that Glu-22 and Asp-40 are the catalytic residues. The tryptophan residues in the chitosanase do not participate directly in the substrate binding but stabilize the protein structure by interacting with hydrophobic and carboxylic side chains of the other amino acid residues. Structural and functional similarities were found between chitosanase, barley chitinase, bacteriophage T4 lysozyme, and goose egg white lysozyme, even though these proteins share no sequence similarities. This information can be helpful for the design of new chitinolytic enzymes that can be applied to carbohydrate engineering, biological control of phytopathogens, and other fields including chitinous polysaccharide degradation.