1. A purified cellulolytic component C(1) was isolated free from associated activities of the cellulase complex and shown to act as a beta-1,4-glucan cellobiohydrolase on both simple and complex forms of native cellulose. 2. The enzyme releases terminal cellobiose units from cellulose, its extent of action being determined principally by the product and by the nature of the substrate. 3. Component C(x) of the cellulase system is not required for the action of component C(1) (cellobiohydrolase). The enzyme synergizes extensively with cellobiase in extending the hydrolysis of native and of less-complex forms of cellulose to at least 70% with the liberation of glucose. 4. The cellobiohydrolase is relatively unstable, with an optimum at pH5 and a K(m) of 0.05mg/ml. The enzyme is inhibited by its product, from which it is released by cellobiase. 5. Of other compounds tested against the cellobiohydrolase the metal ions Cu(2+), Zn(2+), phenylmercuric and Fe(3+) are increasingly effective inhibitors. Glucose has no action at concentrations found inhibitory with cellobiose. 6. The relationship of the enzyme to the entire cellulase complex is discussed.