Induction of xylitol dehydrogenase of Candida tropicalis ATCC 20913 by various carbon sources was investigated. The enzyme activity was induced when the yeast was grown on L-arabinose and D-xylose. A novel gene encoding the enzyme was cloned and characterized. The 1,095-bp coding sequence of the gene encodes a polypeptide of 364 amino acids, with a molecular mass of 39.4 kDa. Sequence analysis of the putative protein showed it to be a member of the zinc-containing alcohol dehydrogenase family and to have homology to xylitol dehydrogenase genes from other yeasts and fungi. The recombinant xylitol dehydrogenase expressed in Escherichia coli oxidized polyols such as xylitol and D-sorbitol and reduced ketoses such as D-xylulose and D-fructose. It required exclusively NAD or NADH as a cofactor.