ABSTRACTCave sets the example of extreme ecological niche and habitat for diversified microorganisms. Present study involved in the isolation of endoxylanase producing novel strain Bacillus velezensis AG20 from the Krem Phyllut cave, Meghalaya, India. Culture dependent studies, molecular phylogentics, RNA secondary folding pattern based on 16S rDNA substantiated the identity of this novel strain. Bacillus velezensis AG20 revealed the superbug quality having resistance against various class of broad-spectrum antibiotics. Bacillus velezensis AG20 revealed biofilm formation over the cell surface in FESEM. Highest cell biomass and xylanase production supported in TB medium, further purified partially to 5.3 fold with 21% yield. Molecular weight of the purified xylanase found to be 45 kDa. Enzyme kinetics and pattern of hydrolysis revealed the evidence for the selection of linear birchwood xylan with Vmax = 21.0 ± 3.0 U/ml, Km = 1.25 mg/ml, Kcat = 1.75/s at optimum pH 7 and temperature 50°C also found significant statistically in Taguchi’s orthogonal design. Conversely, ruled out any exoacting activity against synthetic pNP-xylopyranoside substrate. Endo-xylanase isolated from Bacillus velezensis AG20 was moderately thermostable over temperatures 50 and 60°C. Time dependent hydrolysis of agro-waste sugar cane bagasse depicted the production of xylooligosaccharides (XOS) predominantly xylobiose, xylotriose and xylotetrose. Purified mixed XOS hold their prebiotic potential by promoting the growth of probiotics Bifidobacterium and Lactobacillus as well as high stability (~90%) against systemic fluids. Mixed XOS (300 μg/ml) displayed anti-proliferation activities by reducing the growth of HT-29 and Caco-2 cells significantly 90% and 75%, respectively, after 48 h.IMPORTANCEExtremophiles dwelling inside the caves have laden with the extraordinary capabilities of bioconversion by nature. The pristine ecological niche inside the cave, absence of proper light and air, supports the livelihood of novel microorganisms. In India, Meghalaya is hoisting longest caves in the East Khasi Hills, providing conducive environment for novel bacterial strains. With the prime objective of isolating novel bacterial strains that produce extracellular xylanase our studies have been carried out. Considering the present industrial demand for nutraceutical, prebiotics, anti-proliferating agents and biofuels by the conversion of lignocellulosic biomass (LCB), novel enzymes are required. Xylanases from bacterial origin play a significant role in conversion of LCB into oligosaccharides. Therefore, exploration and characterization of xylanase producing novel isolate from cave may pave the new arena for the production of prebiotic and anti-inflammatory oligosaccharides from agro-waste.