The genes encoding xylitol dehydrogenase (Texdh) and L: -arabitol dehydrogenase (Telad) are involved in the fungal pentose pathway and were isolated from the thermophilic fungus Talaromyces emersonii, expressed in Escherichia coli, and the products purified to homogeneity. TeXDH showed activity toward xylitol and D: -sorbitol. TeLAD was active with L: -arabitol, xylitol, and D: -sorbitol. Phylogenetic analysis showed TeLAD has evolved from D: -sorbitol dehydrogenase as a result of environmental adaptation. Substrate specificity studies indicate that TeXDH is likely to have evolved from the more broadly acting TeLAD. Texdh and Telad expression was inducible by the same carbon sources responsible for induction of genes involved in biomass degradation, suggesting for the first time a coordinated regulatory control mechanism for expression of genes encoding extracellular hydrolases and intracellular metabolic genes in the pentose utilization pathways of T. emersonii. These data also suggest that TeXDH and TeLAD may be valuable in the production of xylitol, L: -arabitol, and ethanol from renewable resources rich in pentose sugars.