The present study aimed at optimization of culture condition for the enhanced production of extra cellular thermostable cellulase-free xylanase from Bacillus pumilus by solid-state fermentation. Batch studies were carried out to evaluate various agro-industrial residues such as rice bran, rice husk, rice straw, sawdust, coconut pith, sugarcane bagasse and wheat bran for enzyme production by the bacterial culture. The endoxylanase production was highest on wheat bran media (5582 U/gds), which was enhanced 3.8-fold (21431 U/gds) by optimization of cultivation conditions. The enzymatic extracts was used in mixed wastepaper recycling, which resulted in a considerable improvement of the paper strength with high drainage and easy drying up. The results of enzyme application with recycled paper clearly indicated that the effective use of enzymes in fiber separation could reduce the cost of carton paper production. (c) 2006 Elsevier Ltd. All rights reserved.