Xylanase producing thermophilic actinomycetes strain B42 was isolated from bagasse. This strain was enriched on oat spelt xylan agar medium and screened onto xylan-congo red agar plate by the xylanolysis method. The Phylogenetic analysis using 16S rDNA sequence data showed that strain B42 had the highest homology (99.0%) with Laceyella sacchari and it was named as L. sacchari strain B42. L. sacchari strain B42 xylanase was purified to study its biochemical characteristics and its biobleaching efficiency. The partial purification of xylanase using acetone fractionation (at 1:3.0 ratio) gave 2.51 fold purification and the recovery of 88%. Further purification of the partially purified xylanase using DEAE-Sephadex A-50 and G-100 column chromatography gave 11.41 fold purification and 22.80% yield with the specific activity of 1750.0 U/mg. The molecular mass of the purified xylanase was ~30.0 kDa, as analyzed by SDS/PAGE and zymogram. The enzyme reactions followed Michaelis-Menten kinetics with Km and Vmax values of 4.166 mM and 3787.87µmole/min/ml/mg, respectively, as obtained from a Lineweaver-Burk plot. The optimal temperature of the enzyme was 70°C. The enzyme retained 72% of its activity at 70°C and 48% activity at 80°C after 6 h of incubation. The half life (t 1/2 ) of purified xylanase was 6 h at 80°C. The optimal pH of xylanase activity was 10.0 and enzyme appeared to be stable over a broad pH range (pH, 11.0 to 12.0) under the assay conditions. Approximately 68 and 64% of the original activity was retained after 5 h of incubation at pH, 10.0 and 11.0, respectively. The enzymatic biobleaching of kraft pulp reduced ~26% kappa number, decreased 1.68% lignin content and released 24 fold reducing sugars. The enzyme also released sufficient amount of phenolic and hydrophobic compounds. The UV absorption spectrum of the compounds released by enzymatic treatment at 280 nm indicates the presence of lignin in the released coloring matter.