A white rot fungus, identified as Trametes hirsuta based on morphological and phylogenetic analysis, was found to contain efficient cellulose degrading enzymes. The strain showed maximum endoglucanase (EG), cellobiohydrolase (CBH) and beta-glucosidase (BGL) activities of 55, 0.28 and 5.0 U/mg-protein, respectively. Rice straw was found to be a potentially good substrate for growth of T. hirsuta for cellulase production. Statistical experimental design was used to optimize hydrolysis parameters such as pH, temperature, and concentrations of substrates and enzymes to achieve the highest saccharification yield. Enzyme concentration was identified as the limiting factor for saccharification of rice straw. A maximum saccharification rate of 88% was obtained at an enzyme concentration of 37.5 FPU/g-substrate after optimization of the hydrolysis parameters. The results of a confirmation experiment under the optimum conditions agreed well with model predictions. T. hirsuta may be a good choice for the production of reducing sugars from cellulosic biomass.