Bioethanol production from lignocellulosic biomass, in particular xylose, is currently of great concern, given the abundance of this sugar in the world, because Saccharomyces cerevisiae, which is widely used for bioethanol production, is unable to naturally ferment xylose. The aim of this study was to obtain a novel yeast capable of stably producing ethanol from biomass containing xylose by protoplast fusion between S. cerevisiae and xylose-utilizing yeast. We describe a novel xylose-fermenting yeast strain, FSC1, developed for ethanol production by intergeneric hybridization between S. cerevisiae and Candida intermedia mutants by using a protoplast fusion technique. The characteristics of the FSC1 strain are reported with respect to xylose fermentation, morphology, gene, and protein expression. Mutation of the parental strains prior to protoplast fusion endowed the FSC1 strain with the ability to convert xylose to ethanol. Microscopic analysis confirmed that the parental and FSC1 strains produced spores in the potassium acetate medium. The FSC1 strain is uninucleate diploid, has a stable metabolism, and expresses proteins at a higher level than the parental strains. We found that FSC1 strain could stably achieve an ethanol yield of 0.38 g/g-substrate in fermentation of a mixture of glucose and xylose. In addition, the fermentation ability of FSC1was improved by successive chemical mutation, resulting in a higher ethanol yield of 0.42 g/g-substrate, corresponding to 82% theoretical yield. The mutation-fusion technique we have described here is very useful for the development of intergeneric hybrids capable of xylose fermentation, and the FSC strains generated using this technique have the potential for industrial use in ethanol production from lignocellulosic biomass.