A novel beta-1,3-1,4-glucanase in the glycoside hydrolase family 5 (GH5) has been identified in the secretome of Paenibacillus polymyxa KF-1. The recombinant GH5 enzyme PpBglu5A shows broad substrate specificity, with strong lichenase activity, medium beta-1,3-glucanase activity, and minimal cellulase activity. Barley beta-glucan, lichenan, curdlan, and carboxymethyl cellulose are hydrolyzed to varying degrees by PpBglu5A, with the highest catalytic activity being observed with barley beta-glucan. Hydrolysates from barley beta-glucan or lichenan are primarily glucan oligosaccharides with degrees of polymerization from 2 to 4. PpBglu5A also hydrolyzes oat bran into oligosaccharides mainly consisted of di-, tri-, and tetra- oligosaccharides that are useful in the preparation of gluco-oligosaccharides. In addition to hydrolytic activity, transglycosylation was also observed with PpBglu5A and cellotriose as substrate. An in vitro assay indicated that the recombinant PpBglu5A has antifungal activity and can inhibit the growth of Canidia albicans. These results suggest that PpBglu5A exhibits unique properties and may be useful as an antifungal agent.