Five previously isolated bacterial strains were cultured on xylan agar medium (XAM) to screen their xylanase production potential. Two best strains were obtained on the basis of clear zones on XAM. The strain, Bacillus licheniformis, produced higher xylanase (3.24 U/ml) was selected for further studies based on quantitative xylanase assay. Both cultural and medium parameters were optimized to yield highest xylanase production. Best cultural conditions found were 5 pH, 1% inoculum size, 37 °C and 24 h of fermentation period. To optimize the xylanase production, medium ingredients viz, banana peels, yeast extract, KH2PO4, K2HPO4, sodium nitrate, MgSO4, peptone, NaCl and ammonium sulfate were screened through 12 runs Plackett–Burman design of response surface methodology. From 12 experimental runs, 4 significantly affecting medium ingredients (banana peels, sodium nitrate, peptone, MgSO4) were selected and further optimized through central composite design. The banana peels (1.5%), sodium nitrate (0.3875%), peptone (0.8%) and MgSO4 (0.775%) had yielded significantly highest xylanase production. Partial characterization of crude xylanase revealed optimum 8 pH and 55 °C temperature.