To reduce pollution and cost of treatment for fresh and recycled paper, co-production of xylanase and laccase was carried out in the same production medium using two compatible species of Bacillus. These co-produced enzymes were used for deinking of old newsprint (ONP) and biobleaching of eucalyptus Kraft pulp. Solid-state co-cultivation of Bacillus sp. and B. halodurans FNP135 was optimized statistically by response surface methodology for the co-production of xylanase (X) and laccase (L). A significant increase in production of xylanase (2.1-fold, 1,685 IU/g) and laccase (2.04-fold, 2,270 nkat/g) was observed under optimized conditions viz. pH (10.5), inoculum size (10 + 10 %) and moisture:substrate ratio (0.8:1). Both the enzymes showed identical temperature and pH optima of 70 °C and 9, respectively, and were used for deinking of ONP pulp and biobleaching of kraft pulp. In case of ONP pulp deinking, the XL treatment increased brightness (11.8 %), freeness (17.8 %), breaking length (34.8 %), burst factor (2.77 %) and tear factor (2.4 %). In case of kraft pulp biobleaching, XL treatment showed a significant increase in brightness (13 %), whiteness (106.15 %) breaking length (49 %), burst factor (6.9 %), tear factor (23 %), and viscosity (11.68 %) and reduction in kappa number (15 %) after alkali extraction and peroxide stage. This enhancement of pulp properties revealed a synergistic effect of xylanase and laccase produced in one setup.