Abstract The partial DNA sequence corresponding to the N-terminal amino acid sequence of cellobiohydrolase derived from a thermophilic anaerobe NA10 was determined. The cellobiohydrolase gene fused to the secretion signal (signal peptide and T-S region) from Saccharomyces diastaticus was expressed in an ethanologenic yeast, S. cerevisiae YIY345, under control of the glucoamylase promoter. The recombinant yeast produced cellobiohydrolase: approximately 40% of the total cellobiohydrolase activity was detected in the medium, and the remaining cellobiohydrolase was localized in the intracellular fraction. An analysis of the N-terminal amino acid sequence of the main intracellular cellobiohydrolase revealed that the signal peptide and T-S region were removed proteolytically. Alteration of the amino acid residues at the cleavage site by insertion of a Bgl II linker led to an approximately 3.5-fold increase in the total cellobiohydrolase production, but did not affect the efficiency of secretion into the medium. Cellobiohydrolase production was not repressed in the presence of glucose. The recombinant yeast hydrolyzed carboxymethyl cellulose in the medium. The results suggest the possibility of the direct bioconversion of cellulose to ethanol by the recombinant yeast.