The invention provides methods of cultivating oil-bearing microbes using xylose as a fixed carbon source. Also provided are microorganisms that have been genetically engineered to metabolize xylose as a fixed carbon source allowing them to convert xylose into oils. Particular advantages of the processes provided herein include production of oils rather than alcohols through the microbial fermentation processes utilizing xylose.
 This invention was made with State of California support under California Energy Commission Grant Number PIR-08-018. The Energy Commission has certain rights to this invention.