A sustainable bioeconomy in agricultural and agro-industrial production must inevitably involve the sustainable use of agricultural residues through zero-waste processes. Corn cob is considered crucial agricultural waste as 278 and 293 million tons were produced worldwide in 2022 and 2023, respectively. Corn cob hydrolysates, which are abundant in xylose and glucose, could be efficiently utilized for xylitol and ethanol production through the cultivation of recycling the yeast strain Candida magnoliae TISTR 5664 in the single-stage and sequential-stage co-production of these products. The statistically significant maxima (p ≤ 0.05) ethanol concentrations were improved by 7.8% (49.9–51.7 g/L or 91.3–95.6% of the theoretical) from the single stage of ethanol production employing recycled cells and 9.9% (50.9–54.1 g/L or 77.3–83.9% of the theoretical) from the second step of sequential-stage co-production using recycled cells without xylitol accumulation. Conversely, the single-stage xylitol production utilizing recycled cells under microaerobic conditions resulted in a statistically significant lower (p ≤ 0.05) xylitol concentration by two folds relative to the control, while ethanol concentration was elevated by almost double. The statistically significant maximum (p ≤ 0.05) xylitol was achieved at 25.9 g/L (58.6% of the theoretical) when sequential-stage co-production was initiated in the first step with fresh inoculum only and not recycled cells. The sequential-stage co-production of xylitol and ethanol presented the potential for statistically significant improvement (p ≤ 0.05) of both xylitol and ethanol production processes.