Thermoalkalophilic xylanases promise potential application in pulp biobleaching to reduce the use of toxic chlorinated chemical agents, which are harmful to the environment. In this study, a thermoalkalophilic endoxylanase gene (bhxyn3) originating from Indonesian indigenous Bacillus halodurans CM1 was cloned into yeast expression vector pPICZα A and expressed in Pichia pastoris KM71 under the control of AOX1 promoter. Recombinant P. pastoris expressed the highest final level of xylanase (146 U/mL) on BMGY medium after five days of cultivation. Optimization of xylanase production on a small scale was carried out by varying the methanol concentrations and the optimal xylanase production by the recombinant P. pastoris was observed in the culture with 2% (v/v) methanol after four days of the induction phase. The recombinant xylanase (BHxyn3E) was thermotolerant and alkalophilic, with an optimal temperature at around 55‐65 °C and under pH 8.0. The enzyme activity was slightly induced by K+, Fe2+, and MoO42‐. Enzymatic bleaching of bagasse pulp with no prior pH adjustment (pH 9) using BHxyn3E at 200 U/g oven dried pulp increased the lightness index (L*) and changed substantially the color a index (a*); however, the treatments did not change the whiteness index in a significant way. Therefore, further optimization and assessment such as adjustment of incubation temperature and pH in biobleaching were needed to reduce the use of harmful chemical agents in industrial applications.