The thermostable fungus, Thermoascus aurantiacus M-2, which produces a novel acidophilic and thermostable xylanase was isolated and identified based on its morphology and comparison of the internal transcribed spacer rDNA gene sequence. The culture conditions and components of medium were optimized for T. aurantiacus M-2 to produce xylanase. T. aurantiacus M-2 produced xylanase at a maximum level of 39.07 U/mL after 8-d fermentation at 45 °C in the optimized medium. The purified xylanase produced by T. aurantiacus M-2 has a relative molecular mass of approximately 31.0 kD. The characteristics of purified xylanase were investigated. The purified T. aurantiacus xylanase exhibited maximum activity at 75 °C and pH 5.0, and it was stable after treatment at a pH range from 2.0 to 10.0 or a temperature range from 30 °C to 80 °C for 2-h. Mn2+ and Ag+ enhanced xylanase activity to 120.0% and 119.6%, respectively, while Mn2+ had the highest inhibition ratio, with a residual activity of 20.7%. This study provided a foundation for scaled-up production and application of xylanase.