Abstract Background β-Glucosidase is claimed as a key enzyme in cellulose hydrolysis. The cellulosic fibers are usually entrapped with hemicelluloses containing xylose. So there is ongoing interest in searching for glucose- and xylose-stimulated β-glucosidases to increase the efficiency of hydrolysis of cellulosic biomass. Results A thermostable β-glucosidase gene (Bglp) was cloned from Anoxybacillus flavithermus subsp. yunnanensis E13T and characterized. Optimal enzyme activity was observed at 60 °C and pH 7.0. Bglp was relatively stable at 60 °C with a 10-h half-life. The kinetic parameters V max and K m for p-nitrophenyl-β-D-glucopyranoside (pNPG) were 771 ± 39 μmol/min/mg and 0.29 ± 0.01 mM, respectively. The activity of Bglp is dramatically stimulated by glucose or xylose at concentrations up to 1.4 M. After Bglp was added to Celluclast® 1.5 L, the conversion of sugarcane bagasse was 48.4 ± 0.8%, which was much higher than of Celluclast® 1.5 L alone. Furthermore, Bglp showed obvious advantages in the hydrolysis when initial concentrations of glucose and xylose are high. Conclusions The supplementation of BglP significantly enhanced the glucose yield from sugarcane bagasse, especially in the presence of high concentrations of glucose or xylose. Bglp should be a promising candidate for industrial applications.