The activity of the GH1 β-glucosidase from Humicola insolens (Bglhi) against p-nitrophenyl-β-D-glucopyranoside (pNP-Glc) and cellobiose is enhanced 2-fold by glucose and/or xylose. Kinetic and transglycosylation data showed that hydrolysis is preferred in the absence of monosaccharides. Stimulation involves allosteric interactions, increased transglycosylation and competition of the substrate and monosaccharides for the -1 glycone and the +1/+2 aglycone binding sites. Protein directed evolution has been used to generate 6 mutants of Bglhi with altered stimulation patterns. All mutants contain one of three substitutions (N235S, D237V or H307Y) clustered around the +1/+2 aglycone binding sites. Two mutants with the H307Y substitution preferentially followed the transglycosylation route in the absence of xylose or glucose. The strong stimulation of their pNP-glucosidase and cellobiase activities was accompanied by increased transglycosylation and higher monosaccharide tolerance. The D237V mutation favoured hydrolysis over transglycosylation and the pNP-glucosidase activity, but not the cellobiase activity, was stimulated by xylose. The substitution N235S abolished the preference for hydrolysis or transglycosylation; the cellobiase, but not the pNP-glucosidase activity of the mutants was strongly inhibited by xylose. Both the D237V and N235S mutations lowered tolerance to the monosaccharides. These results provide evidence that the fine modulation of the activity of Bglhi and mutants by glucose and/or xylose is regulated by the relative affinities of the glycone and aglycone binding sites for the substrate and the free monosaccharides.