Xylose utilization is of commercial interest for efficient conversion of abundant plant material to ethanol. Perhaps the most important ethanol-producing organism, Saccharomyces cerevisiae, however, is incapable of xylose utilization. While S. cerevisiae strains have been metabolically engineered to utilize xylose, none of the recombinant strains or any other naturally occurring yeast has been able to grow anaerobically on xylose. Starting with the recombinant S. cerevisiae strain TMB3001 that overexpresses the xylose utilization pathway from Pichia stipitis, in this study we developed a selection procedure for the evolution of strains that are capable of anaerobic growth on xylose alone. Selection was successful only when organisms were first selected for efficient aerobic growth on xylose alone and then slowly adapted to microaerobic conditions and finally anaerobic conditions, which indicated that multiple mutations were necessary. After a total of 460 generations or 266 days of selection, the culture reproduced stably under anaerobic conditions on xylose and consisted primarily of two subpopulations with distinct phenotypes. Clones in the larger subpopulation grew anaerobically on xylose and utilized both xylose and glucose simultaneously in batch culture, but they exhibited impaired growth on glucose. Surprisingly, clones in the smaller subpopulation were incapable of anaerobic growth on xylose. However, as a consequence of their improved xylose catabolism, these clones produced up to 19% more ethanol than the parental TMB3001 strain produced under process-like conditions from a mixture of glucose and xylose.