Microorganisms producing xylanase were screened for the enzymatic production of xylo-oligo saccharides from xylan. One of the bacteria isolated from compost produced an endoxylanase extracellularly. The bacterium was identified as Bacillus sp. according to its taxonomic characteristics examined. Xylanase production reached upto 5 U/ml after 22 h of culture in LB medium at $30^{circ}C$. The xylanase was purified by ammonium sulfate precipitation and gel filtration. The molecular weight of the xylanase was estimated to be 20,400 by SDS-PAGE. Optimal temperature and pH for the xylanase activity was $60^{circ}C$ and 6.5, respectively. The enzyme was stable at temperatures upto $40^{circ}C$ and pH values from 4 to 10. The xylanase was completely inhibited by the addition of 2 mM mercury ion. Apparent $K_m$ and $V_max$ values for oat spelt xylan were 9.2 mg/ml and 1954 U/mg protein, respectively. For birchwood xylan, the values were 6.3 mg/ml and 1009 U/mg protein. The predominant products of the xylan hydrolysis were xylobiose, xylotriose and xylotetraose, indicating that the enzyme is an endoxylanase. Upto $85{\%}$ of the initially added enzyme (2 U/ml) was bound to 50 mg/ml of the insoluble fraction of oat spelt xylan after incubation at $30^{circ}C$ for 30 min.