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This study reports an industrially applicable non-sterile xylitol fermentation process to produce xylitol from a low-cost feedstock like corn cob hydrolysate as pentose source without any detoxification. Different immobilization matrices/mediums (alginate, polyvinyl alcohol, agarose gel, polyacrylamide, gelatin, and κ-carrageenan) were studied to immobilize Candida tropicalis NCIM 3123 cells for xylitol production. Amongst this calcium alginate, immobilized cells produced maximum amount of xylitol with titer of 11.1 g/L and yield of 0.34 g/g. Hence, the process for immobilization using calcium alginate beads was optimized using a statistical method with sodium alginate (20, 30 and 40 g/L), calcium chloride (10, 20 and 30 g/L) and number of freezing–thawing cycles (2, 3 and 4) as the parameters. Using optimized conditions (calcium chloride 10 g/L, sodium alginate 20 g/L and 4 number of freezing–thawing cycles) for immobilization, xylitol production increased significantly to 41.0 g/L (4 times the initial production) with corn cob hydrolysate as sole carbon source and urea as minimal nutrient source. Reuse of immobilized biomass showed sustained xylitol production even after five cycles.Electronic supplementary materialThe online version of this article (doi:10.1007/s13205-016-0388-8) contains supplementary material, which is available to authorized users.