In industrial fermentation processes, the yeast Saccharomyces cerevisiae is commonly used for ethanol production. However, it lacks the ability to ferment pentose sugars like d-xylose and l-arabinose. Heterologous expression of a xylose isomerase (XI) would enable yeast cells to metabolize xylose. However, many attempts to express a prokaryotic XI with high activity in S. cerevisiae have failed so far. We have screened nucleic acid databases for sequences encoding putative XIs and finally were able to clone and successfully express a highly active new kind of XI from the anaerobic bacterium Clostridium phytofermentans in S. cerevisiae. Heterologous expression of this enzyme confers on the yeast cells the ability to metabolize d-xylose and to use it as the sole carbon and energy source. The new enzyme has low sequence similarities to the XIs from Piromyces sp. strain E2 and Thermus thermophilus, which were the only two XIs previously functionally expressed in S. cerevisiae. The activity and kinetic parameters of the new enzyme are comparable to those of the Piromyces XI. Importantly, the new enzyme is far less inhibited by xylitol, which accrues as a side product during xylose fermentation. Furthermore, expression of the gene could be improved by adapting its codon usage to that of the highly expressed glycolytic genes of S. cerevisiae. Expression of the bacterial XI in an industrially employed yeast strain enabled it to grow on xylose and to ferment xylose to ethanol. Thus, our findings provide an excellent starting point for further improvement of xylose fermentation in industrial yeast strains.