AbstractSerratia proteamaculans chitinase-D (SpChiD) has a unique combination of hydrolytic and transglycosylation (TG) activities. The TG activity of SpChiD can be used for large-scale production of chito-oligosaccharides (CHOS). The multiple activities (hydrolytic and/or chitobiase activities and TG) of SpChiD appear to be strongly influenced by the substrate-binding cleft. Here, we report the unique property of SpChiD substrate-binding cleft, wherein, the residues Tyr28, Val35 and Thr36 control chitobiase activity and the residues Trp160 and Trp290 are crucial for TG activity. Mutants with reduced (V35G and T36G/F) or no (SpChiDΔ30–42 and Y28A) chitobiase activity produced higher amounts of the quantifiable even-chain TG product with degree of polymerization (DP)-6, indicating that the chitobiase and TG activities are inversely related. In addition to its unprecedented catalytic properties, unlike other chitinases, the single modular SpChiD showed dual unfolding transitions. Ligand-induced thermal stability studies with the catalytically inactive mutant of SpChiD (E153A) showed that the transition temperature increased upon binding of CHOS with DP2–6. Isothermal titration calorimetry experiments revealed the exceptionally high binding affinities for E153A to CHOS with DP2–6. These observations strongly support that the architecture of SpChiD substrate-binding cleft adopted to control chitobiase and TG activities, in addition to usual chitinase-mediated hydrolysis.