The fungus Mucor indicus is able to produce ethanol from xylose as well as dilute-acid lignocellulosic hydrolyzates. The fungus completely assimilated 10 g/L xylose as the sole carbon and energy source within 32 to 65 h at an aeration rate of 0.1 to 1.0 vvm. The highest ethanol yield was 0.16 g/g at 0.1 vvm. Xylitol was formed intermediately with a maximum yield of 0.22 g/g at 0.5 vvm, but disappeared towards the end of experiments. During cultivation in a mixture of xylose and glucose, the fungus did not assimilate xylose as long as glucose was present in the medium. The anaerobic cultivation of the fungus in the hydrolyzate containing 20% xylose and 80% hexoses resulted in no assimilation of xylose but complete consumption of the hexoses in less than 15 h. The ethanol yield was 0.44 g/g. However, the xylose in the hydrolyzate was consumed when the media was aerated at 0.067 to 0.333 vvm. The best ethanol yield was 0.44 g/g at 0.067 vvm. The results of this study suggest that M. indicus hydrolyzate can be first fermented anaerobically for hexose assimilation and subsequently continued under oxygen-limited conditions for xylose fermentation.