Microbial conversion of renewable raw materials to useful products is an important objective in industrial biotechnology. Pichia stipitis, a yeast that naturally ferments xylose, was genetically engineered for l-(+)-lactate production. We constructed a P. stipitis strain that expressed the l-lactate dehydrogenase (LDH) from Lactobacillus helveticus under the control of the P. stipitis fermentative ADH1 promoter. Xylose, glucose, or a mixture of the two sugars was used as the carbon source for lactate production. The constructed P. stipitis strain produced a higher level of lactate and a higher yield on xylose than on glucose. Lactate accumulated as the main product in xylose-containing medium, with 58 g/liter lactate produced from 100 g/liter xylose. Relatively efficient lactate production also occurred on glucose medium, with 41 g/liter lactate produced from 94 g/liter glucose. In the presence of both sugars, xylose and glucose were consumed simultaneously and converted predominantly to lactate. Lactate was produced at the expense of ethanol, whose production decreased to approximately 15 to 30% of the wild-type level on xylose-containing medium and to 70 to 80% of the wild-type level on glucose-containing medium. Thus, LDH competed efficiently with the ethanol pathway for pyruvate, even though the pathway from pyruvate to ethanol was intact. Our results show, for the first time, that lactate production from xylose by a yeast species is feasible and efficient. This is encouraging for further development of yeast-based bioprocesses to produce lactate from lignocellulosic raw material.