Bacillus sp. D04 secreted a bifunctional cellulase that had a molecular weight of 35,000. This cellulase degraded Cm-cellulose, cellotetraose, cellopentaose, p-nitrophenyl-beta-D-cellobioside, and avicel PH101. Based on the high performance liquid chromatography analysis of the degradation products, this cellulase randomly cleaved internal beta-1, 4-glycosidic bonds in cellotetraose and cellopentaose as an endoglucanase. It also hydrolyzed the aglycosidic bond in p-nitrophenyl-beta-D-cellobioside and cleaved avicel to cellobiose as an exoglucanase. Cellobiose competitively inhibited the p-nitrophenyl-beta-D-cellobioside degrading activity but not Cm-cellulose degrading activity. Ten mM p-chloromercuribenzoate inhibited p-nitrophenyl-beta-D-cellobioside degrading activity completely, but Cm-cellulose degrading activity incompletely. Cm-cellulose increased p-nitrophenyl-beta-D-cellobioside degrading activity, and vice versa, whereas methylumbelliferyl-beta-D-cellobiose strongly inhibited p-nitrophenyl-beta-D-cellobioside degrading activity. The cellulase gene (cel gene), 1461 base pairs, of Bacillus sp. D04 was cloned. The nucleotide sequence of the cel gene was highly homologous to those of Bacillus subtilis DLG and B. subtilis BSE616. The cel gene was overexpressed in Escherichia coli, and its product was purified. The substrate specificity and substrate competition pattern of the purified recombinant cellulase were the same as those of the purified cellulase from Bacillus sp. D04. These results suggest that a single polypeptide cellulase had both endo- and exoglucanase activities and each activity exists in a separate site.