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Degrading cellulose is a key step in the processing of lignocellulosic biomass into bioethanol. Cellobiose, the disaccharide product of cellulose degradation, has been shown to inhibit cellulase activity, but the mechanisms underlying product inhibition are not clear. We combined single- molecule imaging and biochemical investigations with the goal of revealing the mechanism by which cellobiose inhibits the activity of Trichoderma reesei Cel7A, a well- characterized exo- cellulase. We find that cellobiose slows the processive velocity of Cel7A and shortens the distance moved per encounter; effects that can be explained by cellobiose binding to the product release site of the enzyme. Cellobiose also strongly inhibits the binding of Cel7A to immobilized cellulose, with a Ki of 2.1 mM. The isolated catalytic domain (CD) of Cel7A was also inhibited to a similar degree by cellobiose, and binding of an isolated carbohydrate- binding module to cellulose was not inhibited by cellobiose, suggesting that cellobiose acts on the CD alone. Finally, cellopentaose inhibited Cel7A binding at micromolar concentrations without affecting the enzyme's velocity of movement along cellulose. Together, these results suggest that cellobiose inhibits Cel7A activity both by binding to the "back door" product release site to slow activity and to the "front door" substrate- binding tunnel to inhibit interaction with cellulose. These findings point to strategies for engineering cellulases to reduce product inhibition and enhance cellulose degradation, supporting the growth of a sustainable bioeconomy. [ABSTRACT FROM AUTHOR]