Xylose is a major constituent of plant lignocellulose, and its fermentation is important for the bioconversion of plant biomass to fuels and chemicals. Pichia stipitis is a well-studied, native xylose-fermenting yeast. The mechanism and regulation of xylose metabolism in P. stipitis have been characterized and genes from P. stipitis have been used to engineer xylose metabolism in Saccharomyces cerevisiae. We have sequenced and assembled the complete genome of P. stipitis. The sequence data have revealed unusual aspects of genome organization, numerous genes for bioconversion, a preliminary insight into regulation of central metabolic pathways and several examples of colocalized genes with related functions. The genome sequence provides insight into how P. stipitis regulates its redox balance while very efficiently fermenting xylose under microaerobic conditions.