Renewable lignocellulosic materials are attractive low-cost feedstocks for bioethanol production. Furfural and 5-hydroxymethylfurfural (HMF) are among the most potent inhibitory compounds generated from acid hydrolysis of lignocelluloses to simple sugars for fermentation. In Saccharomyces cerevisiae ATCC 211239 and NRRL Y-12632 and Pichia stipitis NRRL Y-7124, furfural and HMF inhibition were determined to be dose-dependent at concentrations from 10 to 120 mM. The yeast strains were more sensitive to inhibition by furfural than HMF at the same concentration, while combined treatment of furfural and HMF synergistically suppressed cell growth. A metabolite transformed from HMF by strain NRRL Y-12632 was isolated from the culture supernatant, and conclusively identified as 2,5-bis-hydroxymethylfuran, a previously postulated HMF alcohol, with a composition of C6H8O3 and a molecular weight of 128. It is proposed that, in the presence of HMF, the yeast reduces the aldehyde group on the furan ring of HMF into an alcohol, in a similar manner as for furfural. The accumulation of this biotransformed metabolite may be less toxic to yeast cultures than HMF, as evidenced by the rapid yeast fermentation and growth rates associated with HMF conversion. The ability of yeasts to adapt to and transform furfural and HMF offers the potential for in situ detoxification of these inhibitors and suggests a genetic basis for further development of highly tolerant strains for biofuel production.