The race of ethanol production and the ethanol concentrations attained by the most promising xylose-fermenting yeasts, Pichia stipitis, Candida shehatae, and Pachysolen tannophilus, compare poorly with that of commercial ethanol fermentation by non-xylose-fermenting Saccharomyces cerevisiae using glucose-based substrates. The oxygen requirement for efficient fermentation by the xylose-fermenting yeasts and the lack of such a general requirement by S. cerevisiae indicates basic underlying differences in their physiological relations to oxygen. The redox imbalance in the initial conversion of xylose to xylulose, sensitivity to high concentrations of ethanol differences in the respiratory pathway and sensitivity to microbial inhibitors, particularly those liberated during pretreatment and hydrolysis of lignocellulose substrates, have been identified as major factors limiting ethanol fermentation by the xylose-fermenting yeasts. Recombinant S. cerevisiae, containing functional xylose reductase and xylitol dehydrogenase, grows on, but poorly ferments, xylose. The unfavorable kinetic properties of these enzymes and an inadequate pentose phosphate pathway apparently limit the ability of the recombinant yeast to ferment xylose.