Novel applications for cellulases have reinitiated interest in the regulation of production of these enzymes by the soft rot fungus Trichoderma reesei and related species. This paper reviews the current state of knowledge concerning the question "How can insoluble molecules like cellulose initiate their own breakdown by a microorganism?" The evidence available--based on biochemical as well as molecular biological approaches--favors a model in which conidial bound cellobiohydrolases carry out a first exo-exo-wise attack on the cellulose molecule. The disaccharides so formed (cellobiose, alpha-cellobiono-1,5-lactone) are then taken up by the mycelia and promote further cellulase biosynthesis. Evidence available suggests that they are further metabolized to, rather than being, the "true" inducer. Speculations on the nature of the inducer are presented. The roles of the beta-glucosidases of Trichoderma in this process are discussed. The pathway of cellulase secretion is discussed on the basis of electron microscopical as well as gene sequence information.