Gluconobacter oxydans is known to be a suitable candidate for producing xylitol from d-arabitol. In this study, the enzyme responsible for reducing d-xylulose to xylitol was purified from G. oxydans NH-10 and characterized as xylitol dehydrogenase. It has been reported that XDH depends exclusively on NAD(+)/NADH as cofactors with a relatively low activity, which was proposed to be the direct reason for its limiting the overall conversion process. To better produce xylitol, an engineered G. oxydans PXPG was constructed to coexpress the XDH gene and a cofactor regeneration enzyme (glucose dehydrogenase) gene from Bacillus subtilis. Activities for both enzymes were more than twofold higher in the G. oxydans PXPG than in the wild strain. Approximately 12.23 g/L xylitol was obtained from 30 g/L d-arabitol by resting cells of the engineered strain with a conversion yield of 40.8%, whereas only 7.56 g/L xylitol was produced by the wild strain with a yield of 25.2%. These results demonstrated that increasing the XDH activity and the cofactor NADH supply could improve the xylitol productivity notably.