Streptomyces sp. AOA40, which produces halotolerant and thermotolerant xylanase, was isolated from Mersin soil. Various carbon sources were tested for xylanase production with selected fermentation medium. The best carbon source was selected as corn stover. The effect of corn stover concentration and particle size, composition of fermentation medium, fermentation condition such as initial pH and agitation rate on xylanase production was determined. After production, xylanase was partially purified with ion-exchange chromatography and gel filtration chromatography for characterization of xylanase and application in fruit juice and dough improvement. The optimum pH for the activity of xylanase occurred at pH 6.0 in phosphate buffer, while the optimum temperature was 60°C. The relative xylanase activity in the pH ranges of 4–9 remained between 59.93 and 54.43% of the activity at pH 6.0 (100.00%). The xylanase activity showed a half-life of 172 min at 70°C, which was reduced to 75 min at 80°C. The enzyme was highly inhibited by 10–100 mM of Hg+2, EDTA, Mg+2, SDS and 100 mM Cu+2. Clarity of fruit juices increased after enzymatic treatment of apple (17.85%), grape (17.19%) and orange juice (18.36%) with partially purified xylanase and also reducing sugar concentrations of these fruit juices were improved by 17.21, 16.79 and 19.57%, respectively. Also, dough volume was raised 17.06% with using partially purified Streptomyces sp. AOA40 xylanase in bread making.