Oligoxyloglucan reducing end-specific cellobiohydrolase (OXG-RCBH) is a unique exo-beta-1,4-glucanase that belongs to glycoside hydrolase family 74. The enzyme recognizes the reducing end of xyloglucan oligosaccharides and releases two glucosyl residue segments from the reducing end of the main chain. Previously, we reported that OXG-RCBH consists of two seven-bladed beta-propeller domains. There is a large cleft between the two domains, and a unique loop encloses one side of the active site cleft. Here, we report the X-ray crystal structure of the OXG-RCBH-substrate complex determined to a resolution of 2.4 A. The substrate bound to the cleft, and its reducing end was arranged near the loop region that is believed to impart OXG-RCBH with its activity. We constructed a deletion mutant of the loop region and conducted a detailed analysis. A deletion mutant of the loop region showed endo-activity with altered substrate recognition. More specifically, cleavage occurred randomly instead of at specific sites, most likely due to the misalignment of the substrate within the subsite. We believe that the loop imparts unique substrate specificity with exo-mode hydrolysis in OXG-RCBH.