The availability of an increasing number of microbial genomes, including the genome of the highly versatile white-rot basidiomycete Phanerochaete chrysosporium, offers unique possibilities to study and explore enzymes with potential biotechnological appli cations. In the present project, we will use available microbial genomes as well as comparative genomics (on a gene-to-gene basis) to overexpress, characterize, improve and exploit two types of enzymes for processing of the important marine biopolymer chi tin and its derivative chitosan. The overall long-term goal behind this project is to develop enzyme-based technologies to convert the low value (waste) material chitin (a polymer of N-acetylglucosamine) into high-value chito-oligosaccharides with biologi cal activities. We will (1) clone and overexpress chitosanase- and deacetylase-encoding genes from microbial genomes, (2) characterize the enzymes in detail, (3) conduct structure-function studies to understand how the enzymes work as well as to tailor th eir performance, and, (4) use the new enzymes to convert chitin and chitosan to chito-oligosaccharides with known length, composition and sequence. The functionality of these oligosaccharides will be tested, e.g. in terms of their anti-fungal activities, enzyme inhibiting activities and immunostimulatory activities, as well as in terms of their ability to elicit defence responses in plants. The present project will also touch upon peptidoglycan modification in Gram-positive bacteria by deacetylases, which is of medical importance. By comparing genomes and the results of this project, the potential of deacetylases as a target protein for drug development will be evaluated.