Technical Abstract: Plant cell walls have been shown to contain acetyl groups in hemicelluloses and pectin. The gene, ae1, encoding the acetyl esterase (Ae1) of Hypocrea jecorina was identified by amino terminal sequencing, peptide mass spectrometry, and genomic sequence analyses. The coded polypeptide had 348 amino acid residues with the first 19 serving as a secretion signal peptide. The calculated molecular mass and isoelectric point of the secreted enzyme were 37088 Da and pH 5.89, respectively. No significant homology was found between the predicated Ae1 protein and carbohydrate esterases of known families, but putative ae1 orthologs were found in genomes of many fungi and bacteria that produce cell wall-degrading enzymes. The ael transcript levels were high when the fungal cells were induced with sophorose, cellulose, oat spelt xylan, lactose, and arabinose. The recombinant Ae1, produced by H. jecorina transformed with Ae1 under the cellobiohydrolase I promoter, displayed properties similar to those reported for the native enzyme. The enzyme hydrolyzed acetate ester bond specifically. Using 4-nitrophenyl acetate as substrate, the activity of the recombinant enzyme was enhanced by D-xylose, D-glucose, cellobiose, D-galactose, and xylooligosaccharides, but not by arabinose, mannose, or lactose. Using 4-nitrophenyl beta-D-xylopyranoside monoacetate as substrate in a beta-xylosidase coupled assay, Ae1 hydrolyzed positions 3 and 4 with the same efficiency, while the H. jecorina acetylxylan esterase exclusively deacetylated the position 2 acetyl group. The data presented demonstrated that Ae1 and perhaps other homologous microbial proteins represent a new family of esterases for lignocellulose biodegradation.