Efficient xylose utilization is one of the most important pre-requisites for developing an economic microbial conversion process of terrestrial lignocellulosic biomass into biofuels and biochemicals. A robust ethanol producing yeast Saccharomyces cerevisiae has been engineered with heterologous xylose assimilation pathways. A two-step oxidoreductase pathway consisting of NAD(P)H-linked xylose reductase and NAD(+)-linked xylitol dehydrogenase, and one-step isomerase pathway using xylose isomerase have been employed to enable xylose assimilation in engineered S. cerevisiae. However, the resulting engineered yeast exhibited inefficient and slow xylose fermentation. In order to improve the yield and productivity of xylose fermentation, expression levels of xylose assimilation pathway enzymes and their kinetic properties have been optimized, and additional optimizations of endogenous or heterologous metabolisms have been achieved. These efforts have led to the development of engineered yeast strains ready for the commercialization of cellulosic bioethanol. Interestingly, xylose metabolism by engineered yeast was preferably respiratory rather than fermentative as in glucose metabolism, suggesting that xylose can serve as a desirable carbon source capable of bypassing metabolic barriers exerted by glucose repression. Accordingly, engineered yeasts showed superior production of valuable metabolites derived from cytosolic acetyl-CoA and pyruvate, such as 1-hexadecanol and lactic acid, when the xylose assimilation pathway and target synthetic pathways were optimized in an adequate manner. While xylose has been regarded as a sugar to be utilized because it is present in cellulosic hydrolysates, potential benefits of using xylose instead of glucose for yeast-based biotechnological processes need to be realized.