The cellobiohydrolase Pc_Cel7D is the major cellulase produced by the white-rot fungus Phanerochaete chrysosporium, constituting approximately 10% of the total secreted protein in liquid culture on cellulose. The enzyme is classified into family 7 of the glycoside hydrolases and, like other family members, catalyses cellulose hydrolysis with net retention of the anomeric carbon configuration. Previous work described the apo structure of the enzyme. Here we investigate the binding of the product, cellobiose, and several inhibitors, i.e. lactose, cellobioimidazole, Tris/HCl, calcium and a thio-linked substrate analogue, methyl 4-S-beta-cellobiosyl-4-thio-beta-cellobioside (GG-S-GG). The three disaccharides bind in the glucosyl-binding subsites +1 and +2, close to the exit of the cellulose-binding tunnel/cleft. Pc_Cel7D binds to lactose more strongly than cellobiose, while the opposite is true for the homologous Trichoderma reesei cellobiohydrolase Tr_Cel7A. Although both sugars bind Pc_Cel7D in a similar fashion, the different preferences can be explained by varying interactions with nearby loops. Cellobioimidazole is bound at a slightly different position, displaced approximately 2 A toward the catalytic centre. Thus the Pc_Cel7D complexes provide evidence for two binding modes of the reducing-end cellobiosyl moiety; this conclusion is confirmed by comparison with other available structures. The combined results suggest that hydrolysis of the glycosyl-enzyme intermediate may not require the prior release of the cellobiose product from the enzyme. Further, the structure obtained in the presence of both GG-S-GG and cellobiose revealed electron density for Tris at the catalytic centre. Inhibition experiments confirm that both Tris and calcium are effective inhibitors at the conditions used for crystallization.