Used as a chromogenic substrate in microbiology for the detection and differentiation of microorganisms, particularly in identifying enzyme activity. It is commonly applied in selective media to detect β-D-cellobiosidase activity, which helps in the differentiation of certain bacterial and fungal species. When cleaved by the target enzyme, it releases an indoxyl derivative that oxidizes to form a blue-insoluble dye, providing a clear visual indicator of positive reactions. This property makes it valuable in clinical diagnostics, environmental testing, and food safety for rapid identification of specific pathogens or indicator organisms.