The product and substrate inhibition effects in the fermentation of xylose by free and immobilized Pichia stipitis in kappa-carrageenan gel were determined. The experimental data were obtained from continuous and batch experiments. Process evolution was followed by substrate and product analysis and by a microcalorimetric technique. The results were fitted to Luong’s kinetic model. No evidence of substrate inhibition up to 200 gl(-1) of xylose were found. From 20 gl(-1) of ethanol a marked effect on the productivity as well as on the product yield coefficient was observed. The tolerance of immobilized yeasts to ethanol was lower than that of free cells. Finally, a kinetic expression taking into account the effects of both product and cell concentration on the specific productivity was proposed and validated.