Most of the oleaginous microorganisms cannot assimilate xylose in the presence of glucose, which is the major bottleneck in the bioconversion of lignocellulose to biodiesel. Our present study revealed that overexpression of xylose isomerase (XI) gene xylA or xylulokinase (XK) gene xks1 increased the xylose consumption by 25 to 37% and enhanced the lipid content by 8 to 28% during co-fermentation of glucose and xylose. In xylA overexpressing strain Mc-XI, the activity of XI was 1.8-fold higher and the mRNA level of xylA at 24 h and 48 h was 11- and 13-fold higher than that of the control, respectively. In xks1 overexpressing strain Mc-XK, the mRNA level of xks1 was 4- to 11-fold of that of the control strain and the highest XK activity of 950 nmol min(-1) mg(-1) at 72 h which was 2-fold higher than that of the control. Additionally, expression of a translational fusion of xylA and xks1 further enhanced the xylose utilization rate by 45%. Our results indicated that overexpression of xylA and/or xks1 is a promising strategy to improve the xylose and glucose co-utilization, alleviate the glucose repression, and produce lipid from lignocellulosic biomass in the oleaginous fungus M. circinelloides.