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Abstract. In this paper we generalize the Sato theory to the extended bigraded Toda hierarchy (EBTH). We revise the definition of the Lax equations, give the Sato equations, wave operators, Hirota bilinear identities (HBI) and show the existence of tau function τ (t). Meanwhile we prove the validity of its Fay-like identities and Hirota bilinear equations (HBEs) in terms of vertex operators whose coefficients take values in the algebra of differential operators. In contrast with HBEs of the usual integrable system, the current HBEs are equations of product of operators involving e ∂x and τ (t).

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