The alkalophilic Bacillus circulans D1 was isolated from decayed wood. It produced high levels of extracellular cellulase-free xylanase. The enzyme was thermally stable up to 60°C, with an optimal hydrolysis temperature of 70°C. It was stable over a wide pH range (5.5-10.5), with an optimum pH at 5.5 and 80% of its activity at pH 9.0. This cellulase-free xylanase preparation was used to biobleach kraft pulp. Enzymatic treatment of kraft pulp decreased chlorine dioxide use by 23 and 37% to obtain the same kappa number (κ number) and brightness, respectively. Separation on Sephadex G-50 isolated three fractions with xylanase activity with distinct molecular weights.