Cellobiose: quinone oxidoreductase was purified by ammonium sulfate precipitation, SP-Sephadex C-50 chromatography, and hydroxylapatite column chromatography. The purified enzyme is homogeneous by ultracentrifugal and SDS-gel electrophoretic analyses. The enzyme is a flavoprotein with FAD as the prosthetic group and produces cellobiono-delta-lactone as the product of cellobiose oxidation. Cellopentaose is also oxidized but no oxidation of cellulose could be detected. The enzyme oxidizes lactose and 4-beta-glucosylmannose but not 4-beta-mannosylglucose which implicates the C-2-hydroxyl of the non-reducing end of the disaccharide as important for substrate specificity.