Serratia marcescens YS-1, a chitin-degrading microorganism, produced mainly N-acetylhexosaminidase. The purified enzyme had an optimal pH of approximately 8-9 and remained stable at 40 degrees C for 60 min at pH 6-8. The optimum temperature was around 50 degrees C, and enzyme activity was relatively stable below 50 degrees C. YS-1 N-acetylhexosaminidase hydrolyzed p-nitrophenyl beta-N-acetylgalactosamide by 28.1% relative to p-nitrophenyl beta-N-acetylglucosamide. The N-acetylchitooligosaccharides were hydrolyzed more rapidly, but the cellobiose and chitobiose of disaccharides that had the same beta-1,4 glycosidic bond as di-N-acetylchitobiose were not hydrolyzed. YS-1 N-acetylhexosaminidase efficiently transferred the N-acetylglucosamine residue from di-N-acetylchitobiose (substrate) to alcohols (acceptor). The ratio of transfer to methanol increased to 86% in a reaction with 32% methanol. N-Acetylglucosamine was transferred to the hydroxyl group at C1 of monoalcohols. A dialcohol was used as an acceptor when the carbon number was more than 4 and a hydroxyl group existed on each of the two outside carbons. Sugar alcohols with hydroxyl groups in all carbon positions were not proper acceptors.