1. The action of cell-free filtrates from Trichoderma koningii was examined on undegraded cellulose in the form of cotton fibres, on degraded cellulose in the form of cellulose powder reprecipitated from phosphoric acid and on the soluble cellulose derivative CM-cellulose. 2. The cell-free filtrates compare favourably with intact cellulolytic micro-organisms in producing complete solubilization of undegraded as well as of degraded types of cellulose. Enzymic solubilization of cotton fibres gives quantitative conversion into glucose. Cellobiase is present. 3. The early enzymic breakdown of cotton fibres is characterized by the formation of very short fibres that increase to a maximum and disappear gradually by conversion into glucose. Disintegration of cotton fibres to short fibres is assisted by shaking, and within 20hr. the enzyme converts a minor fraction (up to 16%) of substrate into soluble products and a major portion (80%) into insoluble short fibres. 4. Maximum enzymic activity on cotton fibres occurs at about pH5.0, measured by the formation of short fibres, and at about pH3.8 on reprecipitated cellulose, measured by solubilization of the substrate. 5. Gluconolactone, glucose and cellobiose fail to produce marked inhibition of the enzymic hydrolysis of cotton fibres to short fibres or of the solubilization of reprecipitated cellulose unless present in amounts comparable with or greater than the initial weight of these two forms of cellulose. 6. The heavy-metal ions Cu(2+), Hg(2+) and Fe(3+) at 2mm concentration give 80-100% decrease in the enzymic breakdown of cotton fibres, measured by the formation of short fibres. At the same concentration Hg(2+) and Fe(3+) but not Cu(2+) also produce 70-100% inhibition of the solubilization of reprecipitated cellulose. 7. The ability to hydrolyse cotton fibres to short fibres and CM-cellulose to sugars is completely lost after heating enzyme preparations for 10min. at 71 degrees .