Cellobiase (C) from T. clypeatus was found to be aggregated with sucrase (S) in extra- and intra-cellular fractions, when co-aggregates of the enzyme with sucrase with different activity ratios (C/S) were obtained during purification. The co-aggregates were compared for their activity, stability, and kinetic parameters with a purified sucrase-free cellobiase preparation. The specific activity and stability of both the extra- and intra-cellular enzyme decreased significantly in the absence of sucrase. The catalytic activity (V-max/K-m) of sucrase-free cellobiase were decreased by 4236 and 652 fold compared to the crude enzyme in culture filtrate and mycelial extracts respectively. The stability of the enzyme also decreased versus pH. temperature and in the presence of chaotropic agents such as SDS, Gdn.HCl and urea after disaggregation from sucrase. Optimum temperatures of the free intra- and extra-cellular cellobiase were shifted to 47 degreesC from 45 degreesC after the removal of sucrase from the co-aggregates, whereas optimum pH of the free enzyme and co-aggregates remained the same. Intra-cellular cellobiase had very high affinity for sucrase and it was difficult to separate them. Cellobiase preparations from extra- and intra-cellular fractions were analysed by circular dichroism and light scattering spectroscopy and it was concluded that co-aggregation with sucrase was responsible for a change in conformation of cellobiase in the aggregates. The conformation of intra-cellular enzyme preparations were also different from those in the extra-cellular fractions, Instant regain of cellobiase activity in intra- and extra-cellular preparations were obtained on the addition in vitro of free sucrase from the respective fractions to the incubation mixture. The experiments suggested that hetero-aggregation with sucrase regulates the activity and stability of cellobiase in the fungus.