Cellobiohydrolases are the most effective single component of fungal cellulase systems; however, their molecular mode of action on cellulose is not well understood. These enzymes act to detach and hydrolyze cellodextrin chains from crystalline cellulose in a processive manner, and the carbohydrate-binding module (CBM) is thought to play an important role in this process. Understanding the interactions between the CBM and cellulose at the molecular level can assist greatly in formulating selective mutagenesis experiments to confirm the function of the CBM. Computational molecular dynamics was used to investigate the interaction of the CBM from Trichoderma reesei cellobiohydrolase I with a model of the (1,0,0) cellulose surface modified to display a broken chain. Initially, the CBM was located in different positions relative to the reducing end of this break, and during the simulations it appeared to translate freely and randomly across the cellulose surface, which is consistent with its role in processivity. Another important finding is that the reducing end of a cellulose chain appears to induce a conformational change in the CBM. Simulations show that the tyrosine residues on the hydrophobic surface of the CBM, Y5, Y31 and Y32 align with the cellulose chain adjacent to the reducing end and, importantly, that the fourth tyrosine residue in the CBM (Y13) moves from its internal position to form van der Waals interactions with the cellulose surface. As a consequence of this induced change near the surface, the CBM straddles the reducing end of the broken chain. Interestingly, all four aromatic residues are highly conserved in Family I CBM, and thus this recognition mechanism may be universal to this family.