Cellulose is an economically important material, but routes of its industrial processing have not been fully explored. The plant cell wall - the major source of cellulose - harbours enzymes of the xyloglucan endotransglucosylase/hydrolase (XTH) family. This class of enzymes is unique in that it is capable of elongating polysaccharide chains without the requirement for activated nucleotide sugars (e.g., UDP-glucose) and in seamlessly splitting and reconnecting chains of xyloglucan, a naturally occurring soluble analogue of cellulose. Here, we show that a recombinant version of AtXTH3, a thus far uncharacterized member of the Arabidopsis XTH family, catalysed the transglycosylation between cellulose and cello-oligosaccharide, between cellulose and xyloglucan-oligosaccharide, and between xyloglucan and xyloglucan-oligosaccharide, with the highest reaction rate observed for the latter reaction. In addition, this enzyme formed cellulose-like insoluble material from a soluble cello-oligosaccharide in the absence of additional substrates. This newly found activity (designated "cellulose endotransglucosylase," or CET) can potentially be involved in the formation of covalent linkages between cellulose microfibrils in the plant cell wall. It can also comprise a new route of industrial cellulose functionalization.