Phlebia sp. MG-60 is a white-rot fungus that produces ethanol with high efficiency from lignocellulosic biomass without additional enzymes. Through engineering of this powerful metabolic pathway for fermentation in Phlebia sp. MG-60, chemical compounds other than ethanol could be produced. Here, we demonstrate sugar accumulation from unbleached hardwood kraft pulp and conversion of xylose to xylitol by pyruvate decarboxylase (pdc)-negative Phlebia sp. MG-60. We isolated Phlebia sp. strain MG-60-P2 from protoplasts to unify the protoplast phenotypes of the regenerated strains. Homologous recombination achieved a stable pdc-knockout line, designated KO77. The KO77 line produced traces of ethanol, but accumulated xylitol from xylose or glucose from unbleached hardwood kraft pulp. These metabolic changes in the pdc-knockout strain reflect the potential of metabolic engineering in Phlebia sp. MG-60 for direct production of chemical compounds from lignocellulosic biomass.