Paenibacillus sp. strain W-61, which can utilize xylan as the sole source of carbon and energy, produces extracellular xylanases 1 and 3 (Xyn1 and Xyn3) and cell surface xylanase 5. In this study we found that IppX, immediately downstream of xynl, encodes a lipoprotein located on the outer layer of the cytoplasmic membrane and that the LppX lipoprotein is essential for the secretion of active Xynl across the cytoplasmic membranes. In Escherichia coli, wild-type LppX was destined for the inner layer of the outer membrane. Mutant LppX(C19A), in which Cys-19, a possible lipomodification residue, is replaced with Ala, was located in the periplasm without being anchored to the membranes. Another mutant, LppX(S20D S21D), with substitutions of Asp for Ser-20 and Ser-21 (conversion to an Asp-Asp signal for sorting to the inner membrane), resided on the outer layer of the inner membrane, demonstrating that LppX has the sorting property of a lipoprotein. E. coli harboring both xyn1 and lppX secreted active Xynl into the periplasm. In contrast, E. coli carrying xyn1 alone failed to do so, accumulating inactive Xyn1 in the cytoplasmic membranes. Exogenous LppX(C19A) liberated the inactive Xyn1, which had been stagnating in the inner membrane, into the medium as an active enzyme. Thus, we propose that LppX is a novel type of lipoprotein that assists Xyn1 in making the proper fold necessary for traveling across the cytoplasmic membranes to be secreted as an active enzyme.