Trichoderma reesei Xyn III, an endo-beta-1,4-xylanase belonging to glycoside hydrolase family 10 (GH10), is vital for the saccharification of xylans in plant biomass. However, its enzymatic thermostability and hydrolytic activity on insoluble substrates are low. To overcome these difficulties, the thermostability of Xyn III was improved using random mutagenesis and directed evolution, and its hydrolytic activity on insoluble substrates was improved by creating a chimeric protein. In the screening of thermostable Xyn III mutants from a random mutagenesis library, we identified two amino acid residues, Gln286 and Asn340, which are important for the thermostability of Xyn III. The Xyn III Gln286Ala/Asn340Tyr mutant showed xylanase activity even after heat treatment at 60 A degrees C for 30 min or 50 A degrees C for 96 h, indicating a dramatic enhancement in thermostability. In addition, we found that the addition of a xylan-binding domain (XBD) to the C-terminal of Xyn III improved its hydrolytic activity on insoluble xylan.