The aim of the current study was to optimize the production of xylanase, and its application for ethanol production using the lignocellulosic biomass. A highly thermostable crude xylanase was obtained from the Geobacillus sp. strain DUSELR13 isolated from the deep biosphere of Homestake gold mine, Lead, SD. Geobacillus sp. strain DUSELR13 produced 6 U/mL of the xylanase with the beechwood xylan. The xylanase production was improved following the optimization studies, with one factor at a time approach, from 6 U/mL to 19.8 U/mL with xylan. The statistical optimization with response surface methodology further increased the production to 31 U/mL. The characterization studies revealed that the crude xylanase complex had an optimum pH of 7.0, with a broad pH range of 5.0–9.0, and an optimum temperature of 75 °C. The ~45 kDa xylanase protein was highly thermostable with t1/2 of 48, 38, and 13 days at 50, 60, and 70 °C, respectively. The xylanase activity increased with the addition of Cu+2, Zn+2, K+, and Fe+2 at 1 mM concentration, and Ca+2, Zn+2, Mg+2, and Na+ at 10 mM concentration. The comparative analysis of the crude xylanase against its commercial counterpart Novozymes Cellic HTec and Dupont, Accellerase XY, showed that it performed better at higher temperature, hydrolyzing 65.4% of the beechwood at 75 °C. The DUSEL R13 showed the mettle to hydrolyze, and utilize the pretreated, and untreated lignocellulosic biomass: prairie cord grass (PCG), and corn stover (CS) as the substrate, and gave a maximum yield of 20.5 U/mL with the untreated PCG. When grown in co-culture with Geobacillus thermoglucosidasius, it produced 3.53 and 3.72 g/L ethanol, respectively with PCG, and CS. With these characteristics the xylanase under study could be an industrial success for the high temperature bioprocesses.