Solid-state fermentation of sugarcane bagasse by Penicillium citrinum MTCC 2553 was optimized to maximize the yield of xylanase. Preliminary experiments carried out with various lignocellulosic materials revealed sugarcane bagasse to be the most suitable substrate for producing xylanase. Response surface methodology was used in the optimization. Xylanase activity was maximized in a 5-day batch fermentation carried out under the following conditions: a substrate-to-moisture ratio of 1:5 by mass, an initial pH of 7.0 and an incubation temperature of 30 °C. Under the optimal conditions, the final activity of xylanase was 1645 U g–1 of dry substrate. Xylanase was recovered from an extract of the fermented solids by ammonium sulfate precipitation. The crude enzyme was further purified by dialysis. The activity of the enzyme was enhanced in the presence of Na+, Mg2+, Mn2+, Fe3+, Zn2+, Cu2+, Co2+ and Tween 80. The enzyme was inhibited by Hg2+, Ca2+ and the chelating agent ethylene diamine tetra acetic acid (EDTA)