This invention relates to recombinant-DNA-technology. Specifically this invention relates to new recombinant yeast strains transformed with xylose reductase and/or xylitol dehydrogenase enzyme genes. A yeast strain transformed with the xylose reductase gene is capable of reducing xylose to xylitol and consequently of producing xylitol in vivo. If both of these genes are transformed into a yeast strain, the resultant strain is capable of producing ethanol on xylose containing medium during fermentation. Further, the said new yeast strains are capable of expressing the said two enzymes. Xylose reductase produced by these strains can be used in an enzymatic process for the production of xylitol in vitro.