During acid pre-treatment of lignocellulosic biomass for biofuel ethanol production, mono-saccharides are formed as well several types of compounds, which are inhibitory to yeast. Furans, like 5-hydroxymethylfurfural (HMF) and furfural, are known to inhibit yeast growth and viability and to reduce ethanol productivity. Yeast strains are able to reduce HMF and furfural to less toxic compounds, however the rate of inhibitor conversion and cofactor utilization are strain dependent. (Almeida et. al. 2007). Using microarray analyses we have previously identified a NADPH-dependent enzyme responsible for HMF conversion in S. cerevisiae (Petersson et. al. 2006). In the present work, we have constructed strains with increased HMF conversion rate by overexpression of NAD(P)H dependent- enzymes. The xylose pathway was integrated in such strains in order to analyze the effect of enhanced HMF conversion on the xylose metabolism. In vitro and in vivo assays were used to analyze the HMF reduction capability of the newly constructed strains. The strains were physiologically characterized under aerobic and anaerobic conditions to analyze HMF uptake, xylose consumption and product distribution. By-product formation is discussed in relation to intracellular cofactor levels.