A novel fungal diglycosidase that transforms naringin into naringenin and neohesperidose, a rare biotransformation, has been purified to homogeneity using a simple procedure involving precipitation of the enzyme from the culture filtrate of the fungal strain using 80 % saturation of ammonium sulphate, dissolving the precipitate in minimum volume of the buffer and dialysing that against the buffer. The purified enzyme gives single protein bands of molecular mass 64.6 kDa in SDS-PAGE analysis. The purity of the enzyme has been further confirmed by the appearance of single protein band in native page analysis. Using naringin as the substrate, the diglycosidase has Km and kcat values of 0.20 m mol L−1 and 0.66 s−1, respectively, at pH 4.0 and 313 K. The specific activity of the purified enzyme using naringin as the natural substrate is 1.018 katal/kg. The diglycosidase also transforms rutin into quercetin and rutinose but has no effect on hesperidin. The feasibilities of preparing neohesperidose from naringin and rutinose from rutin on milligram scales using the pure enzyme have been demonstrated. These results open the way for developing an enzymatic process for preparation of neohesperidose from naringin. The reported diglycosidase has immense future applications in food and pharmaceutical industries.