An extracellular beta-fructofuranosidase from the yeast Xanthophyllomyces dendrorhous was characterized biochemically, molecularly, and phylogenetically. This enzyme is a glycoprotein with an estimated molecular mass of 160 kDa, of which the N-linked carbohydrate accounts for 60% of the total mass. It displays optimum activity at pH 5.0 to 6.5, and its thermophilicity (with maximum activity at 65 to 70 degrees C) and thermostability (with a T(50) in the range 66 to 71 degrees C) is higher than that exhibited by most yeast invertases. The enzyme was able to hydrolyze fructosyl-beta-(2-->1)-linked carbohydrates such as sucrose, 1-kestose, or nystose, although its catalytic efficiency, defined by the k(cat)/K(m) ratio, indicates that it hydrolyzes sucrose approximately 4.2 times more efficiently than 1-kestose. Unlike other microbial beta-fructofuranosidases, the enzyme from X. dendrorhous produces neokestose as the main transglycosylation product, a potentially novel bifidogenic trisaccharide. Using a 41% (wt/vol) sucrose solution, the maximum fructooligosaccharide concentration reached was 65.9 g liter(-1). In addition, we isolated and sequenced the X. dendrorhous beta-fructofuranosidase gene (Xd-INV), showing that it encodes a putative mature polypeptide of 595 amino acids and that it shares significant identity with other fungal, yeast, and plant beta-fructofuranosidases, all members of family 32 of the glycosyl-hydrolases. We demonstrate that the Xd-INV could functionally complement the suc2 mutation of Saccharomyces cerevisiae and, finally, a structural model of the new enzyme based on the homologous invertase from Arabidopsis thaliana has also been obtained.