Saccharomyces cerevisiae was metabolically engineered for xylose utilization. The Pichia stipitis CBS 6054 genes XYL1 and XYL2 encoding xylose reductase and xylitol dehydrogenase were cloned into S. cerevisiae. The gene products catalyze the two initial steps in xylose utilization which S. cerevisiae lacks. In order to increase the flux through the pentose phosphate pathway, the S. cerevisiae TKL1 and TAL1 genes encoding transketolase and transaldolase were overexpressed. A XYL1- and XYL2-containing S. cerevisiae strain overexpressing TAL1 (S104-TAL) showed considerably enhanced growth on xylose compared with a strain containing only XYL1 and XYL2. Overexpression of only TKL1 did not influence growth. The results indicate that the transaldolase level in S. cerevisiae is insufficient for the efficient utilization of pentose phosphate pathway metabolites. Mixtures of xylose and glucose were simultaneously consumed with the recombinant strain S104-TAL. The rate of xylose consumption was higher in the presence of glucose. Xylose was used for growth and xylitol formation, but not for ethanol production. Decreased oxygenation resulted in impaired growth and increased xylitol formation. Fermentation with strain S103-TAL, having a xylose reductase/xylitol dehydrogenase ratio of 0.5:30 compared with 4.2:5.8 for S104-TAL, did not prevent xylitol formation.