The effect on D-xylose utilization and the corresponding xylitol and ethanol production by Candida shehatae (ATCC 22984) were examined with different nitrogen sources. These included organic (urea, asparagine, and peptone) and inorganic (ammonium chloride, ammonium nitrate, ammonium sulphate, and potassium nitrate) sources. Candida shehatae did not grow on potassium nitrate. Improved ethanol production (Y(p/s), yield coefficient (grams product/grams substrate), 0.34) was observed when organic nitrogen sources were used. Correspondingly, the xylitol production was also higher with organic sources. Ammonium sulphate showed the highest ethanol:xylitol ratio (11.0) among all the nitrogen sources tested. The ratio of NADH- to NADPH-linked D-xylose reductase (EC 1.1.1.21) appeared to be rate limiting during ethanologenesis of D-xylose. The levels of xylitol dehydrogenase (EC 1.1.1.9) were also elevated in the presence of organic nitrogen sources. These results may be useful in the optimization of alcohol production by C. shehatae during continuous fermentation of D-xylose. Key words: xylose fermentation, Candida shehatae, nitrogen source, oxidoreductive enzymes.