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A nonsporulating fungus isolated from dioxin-containing tropical soils forms cellobiose dehydrogenase when grown in media supplemented by a source of cellulose. The enzyme purified to homogeneity by SDS-PAGE (yield, 43%) had an Mr of 95 kDa; its pH optimum was in the range 5.5–7.0; more than 50% activity was retained at pH 4.0–8.0 (citrate–phosphate buffer). The absorption spectrum of the enzyme in the visible range had the characteristic appearance of flavocytochrome proteins. Cellobiose dehydrogenase oxidized cellobiose and lactose (the respective KM values at pH 6.0 equaled 4.5 ± 1.5 and 56 μM) in the presence of dichlorophenolindophenol (KM,app = 15 ± 3 μM at pH 6.0) taken as an electron acceptor. Other sugars were barely if at all oxidized by the enzyme. Neither ethyl-β-D-cellobioside, heptobiose, nor chitotriose inhibited the enzymatic oxidation of lactose, even under the conditions of 100-fold molar excess. The enzyme was weakly inhibited by sodium azide dichlorophenolindophenol reduction and exhibited an affinity for amorphous cellulose. At 55°C and pH 6.0 (optimum stability), time to half-maximum inactivation equaled 99 min. The enzyme reduced by cellobiose was more stable than the nonreduced form. Conversely, the presence of an oxidizer (dichlorophenolindophenol) decreased the stability eight times at pH 6.0. In addition, the enzyme acted as a potent reducer of the one-electron acceptor cytochrome c3+ (KM,app = 15 μM at pH 6.0).