A cost-effective conversion of lignocellulosic biomass into bioethanol requires that the xylose released from the hemicellulose fraction (20–40% of biomass) can be fermented. Baker’s yeast, Saccharomyces cerevisiae, efficiently ferments glucose but it lacks the ability to ferment xylose. Xylose-fermenting yeast such as Pichia stipitis requires accurately controlled microaerophilic conditions during the xylose fermentation, rendering the process technically difficult and expensive. In this study, it is demonstrated that under anaerobic conditions Spathaspora passalidarum showed high ethanol production yield, fast cell growth, and rapid sugar consumption with xylose being consumed after glucose depletion, while P. stipitis was almost unable to utilize xylose under these conditions. It is further demonstrated that for S. passalidarum, the xylose conversion takes place by means of NADH-preferred xylose reductase (XR) and NAD+-dependent xylitol dehydrogenase (XDH). Thus, the capacity of S. passalidarum to utilize xylose under anaerobic conditions is possibly due to the balance between the cofactor’s supply and demand through this XR–XDH pathway. Only few XRs with NADH preference have been reported so far. 2-Deoxy glucose completely inhibited the conversion of xylose by S. passalidarum under anaerobic conditions, but only partially did that under aerobic conditions. Thus, xylose uptake by S. passalidarum may be carried out by different xylose transport systems under anaerobic and aerobic conditions. The presence of glucose also repressed the enzymatic activity of XR and XDH from S. passalidarum as well as the activities of those enzymes from P. stipitis.