A cellulase producing bacterium (E3 strain) was isolated from fecal matter of elephant and identified as Bacillus sp. using 16S rDNA sequenced based molecular phylogenetic approach. While studying the effect of substrates like Carboxymethyl cellulose (CMC), avicel, starch, maltose, sucrose, glucose, fructose, galactose and lactose on cellulase production, it was found that CMC was best carbon source induced cellulase production followed by lactose in this bacterial strain. A positive synergistic effect of lactose with CMC was also observed with enhancement of 5 -6 times in cellulase production. The optimum cellulase production was recorded with 1% CMC and 1% lactose when added individually in the Omeliansky's medium. The results showed that addition lactose with CMC greatly enhances the production and activity of various cellulase enzymes. The optimal fermentation conditions for the biosynthesis of cellulase by this strain were found to be temperature: 37˚C, pH 7.0. The nitrogen source NH 4 Cl at 0.15% was optimum for cellulase production by this bacterium.