Cellobiase can hydrolyze cellobiose into glucose; it plays a key role in the process of cellulose hydrolysis by reducing the product inhibition. To reuse the enzyme and improve the economic value of cellulosic ethanol, cellobiase was immobilized using sodium alginate and chitosan as carriers by the bubbling method. The immobilization conditions were optimized as follows: enzyme loading of 100 U cellobiase/g carrier, 30 min immobilization, 3.5 wt% sodium alginate, 0.25 wt% chitosan, and 2 wt% calcium chloride. Compared to free enzyme, the immobilized cellobiase had a decreased apparent K(m) and the maximum activity at a lower pH, indicating its higher acidic and thermal stability. The immobilized cellobiase was further tested in the hydrolysis of cellobiose and various cellulosic substrates (microcrystalline cellulose, filter paper, and ammonia-pretreated corn cobs). Together with cellulases, the immobilized cellobiase converted the cellulosic substrates into glucose with the rate and extent similar to the free enzyme.