Beta-glucosidase genes of fungal origins were isolated and heterologously expressed in Saccharomyces cerevisiae to enable growth on the disaccharide, cellobiose. To promote secretion of the beta-glucosidases, the genes were fused to the secretion signal of the Trichoderma reesei xyn2 gene and constitutively expressed from a multi-copy yeast expression vector under transcriptional control of the S. cerevisiae PGK1 promoter and terminator. The resulting recombinant enzymes were characterized with respect to pH and temperature optimum, as well as kinetic properties. The two most promising enzymes, BGL1 from Saccharomycopsis fibuligera and BglA from Aspergillus kawachii, were anchored to the yeast cell surface by fusing the mature proteins to the alpha-agglutinin (AGalpha1) or cell wall protein 2 (Cwp2) peptides. The maximum specific growth rates (mu(max)) of the recombinant S. cerevisiae strains were determined in batch cultivation. S. cerevisiae secreting the recombinant S. fibuligera BGL1 enzyme sustained growth aerobically and anaerobically, in minimal medium containing 5g L(-1) cellobiose at 0.23 h(-1) (compared to 0.29 h(-1) on glucose) and 0.18 h(-1) (compared to 0.25 h(-1) on glucose), respectively. Substrate consumption and product formation were determined to evaluate product yields in glucose and cellobiose.