The effect of several carbon sources on the production of mycelial-bound beta-glucosidase by Humicola grisea var. thermoidea in submerged fermentation was investigated. Maximum production occurred when cellulose was present in the culture medium, but higher specific activities were achieved with cellobiose or sugarcane bagasse. Xylose or glucose (1%) in the reaction medium stimulated beta-glucosidase activity by about 2-fold in crude extracts from mycelia grown in sugarcane bagasse. The enzyme was purified by ammonium sulfate precipitation, followed by Sephadex G-200 and DEAE-cellulose chromatography, showing a single band in PAGE and SDS-PAGE. The beta-glucosidase had a carbohydrate content of 43% and showed apparent molecular masses of 57 and 60 kDa, as estimated by SDS-PAGE and gel filtration, respectively. The optimal pH and temperature were 6.0 and 50 degrees C, respectively. The purified enzyme was thermostable up to 60 min in water at 55 degrees C and showed half-lives of 7 and 14 min when incubated in the absence or presence of 50 mM glucose, respectively, at 60 degrees C. The enzyme hydrolyzed p-nitrophenyl-beta-D-glucopyranoside, p-nitrophenyl-beta-D-galactopyranoside, p-nitrophenyl-beta-D-fucopyranoside, p-nitrophenyl-beta-D-xylopyranoside, o-nitrophenyl-beta-D-galactopyranoside, lactose, and cellobiose. The best synthetic and natural substrates were p-nitrophenyl-beta-D-fucopyranoside and cellobiose, respectively. Purified enzyme activity was stimulated up to 2-fold by glucose or xylose at concentrations from 25 to 200 mM. The addition of purified or crude beta-glucosidase to a reaction medium containing Trichoderma reesei cellulases increased the saccharification of sugarcane bagasse by about 50%. These findings suggest that H. grisea var. thermoidea beta-glucosidase has a potential for biotechnological applications in the bioconversion of lignocellulosic materials.