Soft rot (type II) fungi belonging to the family Xylariaceae are known to substantially degrade hardwood by means of their poorly understood lignocellulolytic system, which comprises various hydrolases, including feruloyl esterases and laccase. In the present study, several members of the Xylariaceae were found to exhibit high feruloyl esterase activity during growth on lignocellulosic materials such as wheat straw (up to 1,675 mU g(-1)) or beech wood (up to 80 mU g(-1)). Following the ester-cleaving activity toward methyl ferulate, a hydrolase of Xylaria polymorpha was produced in solid-state culture on wheat straw and purified by different steps of anion-exchange and size-exclusion chromatography to apparent homogeneity (specific activity, 2.2 U mg(-1)). The peptide sequence of the purified protein deduced from the gene sequence and verified by de novo peptide sequencing shows high similarity to putative α-L-rhamnosidase sequences belonging to the glycoside hydrolase family 78 (GH78; classified under EC 3.2.1.40). The purified enzyme (98 kDa by SDS-PAGE, 103 kDa by size-exclusion chromatography; pI 3.7) converted diverse glycosides (e.g., α-L-rhamnopyranoside and α-L-arabinofuranoside) but also natural and synthetic esters (e.g., chlorogenic acid, hydroxycinnamic acid glycoside esters, veratric acid esters, or p-nitrophenyl acetate) and released free hydroxycinnamic acids (ferulic and coumaric acid) from arabinoxylan and milled wheat straw. These catalytic properties strongly suggest that X. polymorpha GH78 is a multifunctional enzyme. It is the first fungal enzyme that combines glycosyl hydrolase with esterase activities and may help this soft rot fungus to degrade lignocelluloses.