Plant pathogens secrete enzymes that degrade plant cell walls to enhance infection and nutrient acquisition. A novel endotransglucosylase catalyzes cleavage and transfer of β-glucans and decreases the physical strength of plant cell walls. Endotransglucosylation causes depolymerization and polymerization of β-glucans, depending on substrate molecular size. Enzymatic degradation of plant cell walls is required for wall loosening, which enhances pathogen invasion. A Magnaporthe oryzae enzyme, which was encoded by the Mocel7B gene, was predicted to act on 1,3-1,4-β-glucan degradation and transglycosylation reaction of cellotriose after partial purification from a culture filtrate of M. oryzae cells, followed by liquid chromatography-tandem mass spectrometry. A recombinant MoCel7B prepared by overexpression in M. oryzae exhibited endo-typical depolymerization of polysaccharides containing β-1,4-linkages, in which 1,3-1,4-β-glucan was the best substrate. When cellooligosaccharides were used as the substrate, the recombinant enzyme generated reaction products with both shorter and longer chain lengths than the substrate. In addition, incorporation of glucose and various oligosaccharides including sulforhodamine-conjugated cellobiose, laminarioligosaccharides, gentiobiose, xylobiose, mannobiose, and xyloglucan nonasaccharide into β-1,4-linked glucans were observed after incubation with the enzyme. These results indicate that the recombinant enzyme acts as an endotransglucosylase (ETG) that cleaves the glycosidic bond of β-1,4-glucan as a donor substrate and transfers the cleaved glucan chain to another molecule functioning as an acceptor substrate. Furthermore, ETG treatment caused greater extension of heat-treated wheat coleoptiles. The result suggests that ETG functions to induce wall loosening by cleaving the 1,3-1,4-β-glucan tethers of plant cell walls. On the other hand, use of cellohexaose as a substrate for ETG resulted in the production of cellulose II with a maximum length (degree of polymerization) of 26 glucose units. Thus, ETG functions to depolymerize and polymerize β-glucans, depending on the size of the acceptor substrate.