Alginate lyases are important tools to prepare oligosaccharides with various physiological activities by degrading alginate. Particularly, the bifunctional alginate lyase can efficiently hydrolyze the polysaccharide into oligosaccharides. Herein, we cloned and identified a novel bifunctional alginate lyase, AlyA, with a high activity and broad substrate specificity from bacterium Isoptericola halotolerans NJ-05 for oligosaccharides preparation. For further applications in industry, the enzyme has been characterized and its action mode has been also elucidated. It exhibited the highest activity (7984.82 U/mg) at pH 7.5 and 55 °C. Additionally, it possessed a broad substrate specificity, showing high activities towards not only polyM (polyβ-d-mannuronate) (7658.63 U/mg), but also polyG (poly α-l-guluronate) (8643.29 U/mg). Furthermore, the Km value of AlyA towards polyG (3.2 mM) was lower than that towards sodium alginate (5.6 mM) and polyM (6.7 mM). TLC (Thin Layer Chromatography) and ESI-MS (Electrospray Ionization Mass Spectrometry) were used to study the action mode of the enzyme, showing that it can hydrolyze the substrates in an endolytic manner to release a series of oligosaccharides such as disaccharide, trisaccharide, and tetrasaccharide. This study provided extended insights into the substrate recognition and degrading pattern of the alginate lyases, with a broad substrate specificity.