Xylanase producing thermophilic actinomycetes strain B42 was isolated from bagasse. This strain was enriched on oat spelt xylan agar medium and screened onto xylan-congo red agar plate by the xylanolysis method. The phylogenetic analysis using 16S rDNA sequence data confirmed that strain B42 showed highest homology (99.0%) with Laceyella sacchari and was identified as Laceyella sacchari strain B42. Maximal xylanase production was achieved at the incubation period of 48 h with the xylanase and cellulase activities as 24.5 and 0.08 U/ml, respectively. The optimum pH and optimum temperature of L. sacchari strain B42 xylanase was found to be 9.0 and 60°C, respectively. Xylanase was thermostable at 60°C for 1 h and retained 90% of its activity up to 6 h at this temperature, and subsequently enzyme retained 75 and 60% activity at 70 to 80°C, respectively after 6 h. At biobleaching of kraft pulp, enzyme released sufficient amount of phenolic and hydrophobic compounds. The ultraviolet (UV absorption spectrum of the compounds released by enzyme treatment indicated the presence of lignin in the released coloring matter. The enzymatic biobleaching of kraft pulp caused ~12% reduction of kappa number, 6.67 fold releases of reducing sugars and 10% decrease of lignin content at xylanase optimum dose (60 U/g) and time (4 h). Keywords : Biobleaching, kappa number, pulp and paper industry, thermostable, xylanase, 16S rDNA African Journal of Biotechnology Vol. 12(6), pp. 570-579