The current model of cellulose biogenesis in plants, as well as bacteria, holds that the membranous cellulose synthase complex polymerizes glucose moieties from UDP-Glc into beta-1,4-glucan chains which give rise to rigid crystalline fibrils upon extrusion at the outer surface of the cell. The distinct arrangement and degree of association of the polymerizing enzyme units presumably govern extracellular chain assembly in addition to the pattern and width of cellulose fibril deposition. Most evident for Acetobacter xylinum, polymerization and assembly appear to be tightly coupled. To date, only bacteria have been effectively studied at the biochemical and genetic levels. In A. xylinum, the cellulose synthase, composed of at least two structurally similar but functionally distinct subunits, is subject to a multicomponent regulatory system. Regulation is based on the novel nucleotide cyclic diguanylic acid, a positive allosteric effector, and the regulatory enzymes maintaining its intracellular turnover: diguanylate cyclase and Ca2(+)-sensitive bis-(3',5')-cyclic diguanylic acid (c-di-GMP) phosphodiesterase. Four genes have been isolated from A. xylinum which constitute the operon for cellulose synthesis. The second gene encodes the catalytic subunit of cellulose synthase; the functions of the other three gene products are still unknown. Exclusively an extracellular product, bacterial cellulose appears to fulfill diverse biological roles within the natural habitat, conferring mechanical, chemical, and physiological protection in A. xylinum and Sarcina ventriculi or facilitating cell adhesion during symbiotic or infectious interactions in Rhizobium and Agrobacterium species. A. xylinum is proving to be most amenable for industrial purposes, allowing the unique features of bacterial cellulose to be exploited for novel product applications.