A new fungus, Pestalotiopsis sp. XE-1, which produced ethanol from xylose with yield of 0.47 g ethanol/g of consumed xylose was isolated. It also produced ethanol from arabinose, glucose, fructose, mannose, galactose, cellobiose, maltose, and sucrose with yields of 0.38, 0.47, 0.45, 0.46, 0.31, 0.25, 0.31, and 0.34 g ethanol/g of sugar consumed, respectively. It produced maximum ethanol from xylose at pH 6.5, 30°C under a semi-aerobic condition. Acetic acid produced in xylose fermenting process inhibited ethanol production of XE-1. The ethanol yield in the pH-uncontrolled batch fermentation was about 27% lower than that in the pH-controlled one. The ethanol tolerance of XE-1 was higher than most xylose-fermenting, ethanol-producing microbes, but lower than Saccharomyces cerevisiae and Hansenula polymorpha. XE-1 showed tolerance to high concentration of xylose, and was able to grow and produce ethanol even when it was cultivated in 97.71 g/l xylose.