The mode of action of chitin deacetylase from the fungus Mucor rouxii on N-acetylchitooligosaccharides with a degree of polymerization 1-7 has been elucidated. Identification of the sequence of chitin oligomers following enzymatic deacetylation was verified by the alternative use of two specific exo-glycosidases in conjunction with HPLC. The results were further verified by 1H-NMR spectroscopy. It was observed that the length of the oligomer is important for enzyme action. The enzyme cannot effectively deacetylate chitin oligomers with a degree of polymerization lower than three. Tetra-N-acetylchitotetraose and penta-N-acetylchitopentaose are fully deacetylated by the enzyme, while in the case of tri-N-acetylchitotriose, hexa-N-acetylchitohexaose and hepta-N-acetylchitoheptaose the reducing-end residue always remains intact. Furthermore, the enzyme initially removes an acetyl group from the nonreducing-end residue of all chitin oligomers with a degree of polymerization higher than 2, and further catalyses the hydrolysis of the following acetamido groups in a processive fashion. The results are in agreement with the mode of action that the same enzyme exhibits on partially deacetylated water soluble chitosan polymers.