An esterase was isolated from cultures of the filamentous fungus Penicillium funiculosum grown on sugar beet pulp as the sole carbon source. The enzyme (ferulic acid esterase B, FAEB) was shown to be a cinnamoyl esterase (CE), efficiently releasing hydroxycinnamic acids from synthetic ester substrates and plant cell walls, and bound strongly to microcrystalline cellulose. A gene fragment was obtained by PCR using partial amino-acid sequences obtained from the pure enzyme and used to a probe a P. funiculosum genomic DNA library. A clone containing a 1120-bp ORF, faeB, was obtained which encoded a putative 353-residue preprotein including an 18-residue signal peptide, which when expressed in Eschericia coli produced CE activity. Northern analysis showed that transcription of faeB was tightly regulated, being stimulated by growth of the fungus on sugar beet pulp but inhibited by free glucose. The faeB promoter sequence contains putative motifs for binding an activator protein, XLNR, and a carbon catabolite repressor protein, CREA. FAEB was comprised of two distinct domains separated by a 20 residue Thr/Ser/Pro linker region. The N-terminal domain comprised 276 amino acids, contained a G-X-S-X-G motif typical of serine esterases, and was shown to be a member of a family comprising serine esterases, including microbial acetyl xylan esterases, poly (3-hydroxyalkanoate) depolymerases and CEs, and proteins of unknown function from Mycobacterium spp. and plants. The C-terminal domain comprised 39 amino acids and closely resembled the family 1 cellulose binding carbohydrate-binding modules (CBM) of fungal glycosyl hydrolases. This is the first report of a fungal CE with a CBM.