Cellobiase (beta-D-glucosidase) with a molecular weight of 100 kDa and pI 5.2 was isolated from the cellulolytic system of Penicillium verruculosum. Kinetic parameters of enzymatic hydrolysis of cellobiose, gentiobiose, sophorose, and synthetic substrates, i.e. methylumbelliferyl and p-nitrophenyl sugar derivatives were determined. Glucose and D-glucose-delta-lactone competitively inhibited cellobiase (Ki = 0.19 mM and 17 microM, respectively). Glucosyl transfer reactions were studied with cellobiose as a single substrate and in the mixture of cellobiose and methylumbelliferyl cellobioside. The product composition was determined in these systems. The ratio of hydrolysis and transfer reaction rates for cellobiose conversion was calculated.