Two bifunctional enzymes exhibiting combined xylanase and laccase activities were designed, constructed, and characterized by biochemical and biophysical methods. The Bacillus subtilis cotA and xynA genes were used as templates for gene fusion, and the xynA coding sequence was inserted into a surface loop of the cotA. A second chimera was built replacing the wild-type xynA gene by a thermostable variant (xynAG3) previously obtained by in vitro molecular evolution. Kinetic measurements demonstrated that the pH and temperature optima of the catalytic domains in the chimeras were altered by less than 0.5 pH units and 5 °C, respectively, when compared with the parental enzymes. In contrast, the catalytic efficiency (k(cat)/K(m)) of the laccase activity in both chimeras was 2-fold higher than for the parental laccase. Molecular dynamics simulations of the CotA-XynA chimera indicated that the two domains are in close contact, which was confirmed by the low resolution structure obtained by small angle x-ray scattering. The simulation also indicates that the formation of the inter-domain interface causes the dislocation of the loop comprising residues Leu-558 to Lys-573 in the laccase domain, resulting in a more accessible active site and exposing the type I Cu(2+) ion to the solvent. These structural changes are consistent with the results from UV-visible electronic and EPR spectroscopy experiments of the type I copper between the native and chimeric enzymes and are likely to contribute to the observed increase in catalytic turnover number.