A gene encoding a cellobiohydrolase (CBH) was isolated from Thermoascus aurantiacus IFO 9748 and designated as cbh1. The deduced amino acid sequence encoded by cbh1 showed high homology with the sequence of glycoside hydrolase family 7. To confirm the sequence of the gene encoding the CBH, the cloned gene was expressed in the yeast Saccharomyces cerevisiae, in which no cellulase activity was found, and the gene product was purified and subjected to enzymatic characterization. The recombinant enzyme was confirmed as a CBH by analysis of the reaction product and designated as CBHI. Recombinant CBHI retained more than 80% of its initial activity after 1 h of incubation at 65 degreesC and was stable in the pH range 3.0-9.0. The optimal temperature for enzyme activity was about 65 degreesC and the optimal pH was about 6.0. The recombinant enzyme was found to be highly glycosylated and this glycosylation was shown to contribute to the thermostability of the enzyme. CBHI expression was shown to be induced at higher temperature in T. aurantiacus.