Saccharomyces cerevisiae L2612 transformed with genes for xylose reductase and xylitol dehydrogenase (XYL1 and XYL2) grows well on glucose but very poorly on d-xylose. When a gene for d-xylulokinase (XYL3 or XKS1) is overexpressed, growth on glucose is unaffected, but growth on xylose is blocked. Spontaneous or chemically induced mutants of this engineered yeast that would grow on xylose could, however, be obtained. We therefore used insertional transposon mutagenesis to identify two loci that can relieve this xylose-specific growth inhibition. One is within the open reading frame (ORF) of PHO13, and the other is approximately 500 bp upstream from the TAL1 ORF. Deletion of PHO13 or overexpression of TAL1 resulted in a phenotype similar to the insertional mutation events. Quantitative PCR showed that deletion of PHO13 increased transcripts for TAL1, indicating that the growth inhibition imposed by the overexpression of XYL3 on xylose can be relieved by an overexpression of transcripts for downstream enzymes. These results may be useful in constructing better xylose-fermenting S. cerevisiae strains.