Cellulose, a very abundant extracellular polysaccharide, is synthesized in a finely tuned process that involves the activity of glycosyl-transferases and hydrolases. The cellulose microfibril consists of bundles of linear -1,4-glucan chains that are synthesized inside the cell; however, the mechanism by which these polymers traverse the cell membrane is currently unknown. In Gram-negative bacteria, the cellulose synthase complex forms a trans-envelope complex consisting of at least four subunits. Although three of these subunits account for the synthesis and translocation of the polysaccharide, the fourth subunit, BcsZ, is a periplasmic protein with endo--1,4-glucanase activity. BcsZ belongs to family eight of glycosyl-hydrolases, and its activity is required for optimal synthesis and membrane translocation of cellulose. In this study we report two crystal structures of BcsZ from Escherichia coli. One structure shows the wild-type enzyme in its apo form, and the second structure is for a catalytically inactive mutant of BcsZ in complex with the substrate cellopentaose. The structures demonstrate that BcsZ adopts an (␣/␣) 6 -barrel fold and that it binds four glucan moieties of cellopentaose via highly conserved residues exclusively on the nonreducing side of its catalytic center. Thus, the BcsZ-cellopentaose structure most likely represents a posthydrolysis state in which the newly formed nonreducing end has already left the substrate binding pocket while the enzyme remains attached to the truncated polysaccharide chain. We further show that BcsZ efficiently degrades -1,4-glucans in in vitro cellulase assays with carboxymethyl-cellulose as substrate.Cellulose, one of the most abundant biopolymers in nature, is produced by most vascular plants and a large number of algae, but is also found in some bacteria and even tunicates (1, 2). The cellulose microfibril consists of linear chains of glucose molecules that are linked via -1,4-glycosidic bonds (-1,4-glucan) and are bundled together to form cable-like structures outside the cell (3, 4). A key enzyme in the biosynthesis of cellulose is the membrane-embedded cellulose synthase, which catalyzes the polymerization of UDP-activated glucose molecules (5, 6) and, presumably, also the translocation of the growing polysaccharide across the cell membrane (7). The bacterial cellulose synthase (Bcs) 2 complex is predicted to form a trans-envelope secretion system comprising at least four subunits (6). Although the BcsA, -B, and -C subunits are involved in synthesizing and translocating the -1,4-glucan across the inner and the outer membrane, the fourth subunit, BcsZ, is a periplasmic protein with endo--1,4-glucanase activity (8).BcsZ belongs to family 8 of glycoside hydrolases (GH-8) that adopts an (␣/␣) 6 -barrel architecture, consisting of two rings of six parallel ␣-helices with opposing orientation in both rings (9). GH-8 enzymes hydrolyze glycosidic bonds with a pair of acidic residues in a reaction that inverts the anomeric configuration at the new reducing end...