Mutants of Penicillium janthinellum NCIM 1171 were evaluated for cellulase production using both submerged fermentation (SmF) and solid state fermentation (SSF). Mutant EU2D-21 gave highest yields of cellulases in both SmF and SSF. Hydrolysis of Avicel and cellulose were compared using SmF and SSF derived enzyme preparations obtained from EU2D-21. Surprisingly, the use of SSF derived preparation gave less hydrolysis compared to SmF derived enzymes. This may be due to inactivation of β-glucosidase at 50<SUP>o</SUP>C in SSF derived enzyme preparations. SmF derived enzyme preparations contained both thermostable and thermosensitive β-glucosidases where as SSF derived enzyme preparations contained predominantly thermosensitive β-glucosidase. This is the first report on less thermostability of SSF derived β-glucosidase which is the main reason for getting less hydrolysis.