Cold-active acetyl xylan esterases allow for reduced bioreactor heating costs in bioenergy production. Here, we isolated and characterized a cold-active acetyl xylan esterase (PbAcE) from the psychrophilic soil microbe Paenibacillus sp. R4. The enzyme reversibly hydrolyzes glucose penta-acetate and xylan acetate, alternatively producing acetyl xylan from xylan, and it shows higher activity at 4°C than at 25°C. We solved the crystal structure of PbAcE at 2.1-Å resolution to investigate its active site and the reason for its low-temperature activity. Structural analysis showed that PbAcE forms a hexamer with a central substrate binding tunnel, and the inter-subunit interactions are relatively weak compared with those of its mesophilic and thermophilic homologs. PbAcE also has a shorter loop and different residue composition in the β4–α3 and β5–α4 regions near the substrate binding site. Flexible subunit movements and different active site loop conformations may enable the strong low-temperature activity and broad substrate specificity of PbAcE. In addition, PbAcE was found to have strong activity against antibiotic compound substrates, such as cefotaxime and 7-amino cephalosporanic acid (7-ACA). In conclusion, the PbAcE structure and our biochemical results provide the first example of a cold-active acetyl xylan esterase and a starting template for structure-based protein engineering. This manuscript describes the thorough characterization of a new member of the C7 family of carbohydrate esters, specifically the acetyl xylan esterase (AXE) from Paenibacillus sp (PbAcE). This is the first characterization of a cold-active AXE and the enzyme has a number of potential industrial applications.