In the present study, Paenibacillus lautus strain BHU3 isolated from landfill soil was evaluated for the presence of potential endoglucanases which are the first candidate of cellulase enzyme system to act on cellulose. In-silico analysis revealed high potential thermostable endoglucanases which can efficiently interact with cellulose. The most potent and thermostable endoglucanase (locus tag id. CPZ30_18280) belonged to glycosyl family-5 and had interaction energy of − 12.981 kcal/mol for the best docked cluster containing three out of ten docking conformations, and Tm value of 73.3 °C. MD simulation of 100 ns proved highly stable binding interactions of CPZ30_18280 endoglucanase with cellulose with root mean square deviation (RMSD) values ranging from 0.15 to 0.30 nm. Consistent interactions with characteristic active site residues (tyrosine, tryptophan and aspartate) of glycosyl family-5 endoglucanases were found. Further, to enhance the production of endoglucanases, the fermentation conditions were optimized employing approaches like one factor at a time (OFAT) and response surface methodology (RSM). Maximum activity of endoglucanase was determined at 60 °C. The optimized conditions for enhanced production of endoglucanase (10.15 U/mL) were pH 6.63, yeast extract conc. 3.44 g/L, wheat bran 3.59%, and inoculum size 2.65%. Hence, P. lautus strain BHU3 has enormous potential to synthesize highly efficient thermostable endoglucanases under optimized regime using agro-wastes. Thus, it could find immense industrial applications including large scale cellulose conversion to bioethanol.