The nag1 gene of the mycoparasitic fungus Trichoderma atroviride encodes a 73-kDa N-acetyl-beta- d-glucosaminidase, which is secreted into the medium and partially bound to the cell wall. To elucidate the role of this enzyme in chitinase induction and biocontrol, a nag1-disruption mutant was prepared. It displayed only 4% of the original N-acetyl-beta- d-glucosaminidase activity, indicating that the nag1 gene product accounts for the majority of this activity in T. atroviride. The nag1-disruption strain was indistinguishable from the parent strain in growth and morphology, but exhibited delayed autolysis. Northern analysis showed that colloidal chitin disruption does not induce ech42 gene transcription in the nag1-disruption strain. Enzyme activities capable of hydrolysing p-nitrophenyl- N, N'-diacetylchitobioside and p-nitrophenyl- N, N'-diacetylchitotriose were also absent from the nag1-disruption strain under the same conditions. Retransformation of the T. atroviride nag1-disruption strain with the nag1 gene essentially led to the parent-type behaviour in all these experiments. However, addition of N-acetyl-beta- d-glucosaminidase to the medium of the nag1-disruption strain did not rescue the mutant phenotype. The disruption- nag1 strain showed 30% reduced ability to protect beans against infection by Rhizoctonia solani and Sclerotinia sclerotiorum. The data indicate that nag1 is essential for triggering chitinase gene expression in T. atroviride and that its functional impairment reduces biocontrol by T. atroviride by a significant extent.