A mutant of the native fungus Trichoderma aureoviride, 7-121, selected for its overproduction of extracellular cellulase and ß-glucosidase (cellobiase) was obtained. In shake flask cultures, production of endoglucanase, filter paper activity and cellobiase increased two to four- fold as compared with the wild type strain. The mutant strain is stable and grows rapidly in liquid as well as in solid culture media. Enzyme yields were best when pH was controlled so that it did not fall bellow pH 3.5. Cellobiase production by this mutant is particularly high (approximately 5 U/ml) as compared to other Trichoderma, strains, which makes it a suitable candidate for waste cellulose degradation. In addition, the mutant strain showed enhanced production of fungal cell wall degrading enzymes: chitinases,ß-1,3-glucanases and proteases. This improvement in extracellular enzyme production by the mutant T. aureoviride 7-121 suggests that it is a suitable strain to be used in biological control.