Xylitol dehydrogenase (XDH) was purified from the cytoplasmic fraction of Gluconobacter oxydans ATCC 621. The purified enzyme reduced D-xylulose to xylitol in the presence of NADH with an optimum pH of around 5.0. Based on the determined NH2-terminal amino acid sequence, the gene encoding xdh was cloned, and its identity was confirmed by expression in Escherichia coli. The xdh gene encodes a polypeptide composed of 262 amino acid residues, with an estimated molecular mass of 27.8 kDa. The deduced amino acid sequence suggested that the enzyme belongs to the short-chain dehydrogenase/reductase family. Expression plasmids for the xdh gene were constructed and used to produce recombinant strains of G. oxydans that had up to 11-fold greater XDH activity than the wild-type strain. When used in the production of xylitol from D-arabitol under controlled aeration and pH conditions, the strain harboring the xdh expression plasmids produced 57 g/l xylitol from 225 g/l D-arabitol, whereas the control strain produced 27 g/l xylitol. These results demonstrated that increasing XDH activity in G. oxydans improved xylitol productivity.