A novel enzyme, cycloisomaltooligosaccharide glucanotransferase (CITase), catalyzes the conversion of dextran to cyclic isomaltooligosaccharides by intramolecular transglucosylation (cyclization reaction). CITase was purified to homogeneity from the culture filtrate of Bacillus sp. T-3040 isolated from soil. The Mr of the enzyme was estimated to be 98,000 by SDS-PAGE. The enzyme catalyzed the cyclization reaction and gave three cyclic isomaltooligosaccharides (cycloisomalto-heptaose, -octase, and -nonaose) at a total yield of about 20%. Coupling and disproportionation reactions were also observed. These results showed that this enzyme is a multi-functional enzyme which catalyzes intramolecular and intermolecular transglucosylation.