A fungal strain, BCC2871 (Periconia sp.), was found to produce a thermotolerant beta-glucosidase, BGL I, with high potential for application in biomass conversion. The full-length gene encoding the target enzyme was identified and cloned into Pichia pastoris KM71. Similar to the native enzyme produced by BCC2871, the recombinant beta-glucosidase showed optimal temperature at 70 degrees C and optimal pH of 5 and 6. The enzyme continued to exhibit high activity even after long incubation at high temperature, retaining almost 60% of maximal activity after 1.5h at 70 degrees C. It was also stable under basic conditions, retaining almost 100% of maximal activity after incubation for 2h at pH8. The enzyme has high activity towards cellobiose and other synthetic substrates containing glycosyl groups as well as cellulosic activity toward carboxymethylcellulose. Thermostability of the enzyme was improved remarkably in the presence of cellobiose, glucose, or sucrose. This beta-glucosidase was able to hydrolyze rice straw into simple sugars. The addition of this beta-glucosidase to the rice straw hydrolysis reaction containing a commercial cellulase, Celluclast 1.5L (Novozyme, Denmark) resulted in increase of reducing sugars being released compared to the hydrolysis without the beta-glucosidase. This enzyme is a candidate for applications that convert lignocellulosic biomass to biofuels and chemicals.