Economic bioconversion of plant cell wall hydrolysates into fuels and chemicals has been hampered mainly due to the inability of microorganisms to efficiently co-ferment pentose and hexose sugars, especially glucose and xylose, which are the most abundant sugars in cellulosic hydrolysates. Saccharomyces cerevisiae cannot metabolize xylose due to a lack of xylose-metabolizing enzymes. We developed a rapid and efficient xylose-fermenting S. cerevisiae through rational and inverse metabolic engineering strategies, comprising the optimization of a heterologous xylose-assimilating pathway and evolutionary engineering. Strong and balanced expression levels of the XYL1, XYL2, and XYL3 genes constituting the xylose-assimilating pathway increased ethanol yields and the xylose consumption rates from a mixture of glucose and xylose with little xylitol accumulation. The engineered strain, however, still exhibited a long lag time when metabolizing xylose above 10 g/l as a sole carbon source, defined here as xylose toxicity. Through serial-subcultures on xylose, we isolated evolved strains which exhibited a shorter lag time and improved xylose-fermenting capabilities than the parental strain. Genome sequencing of the evolved strains revealed that mutations in PHO13 causing loss of the Pho13p function are associated with the improved phenotypes of the evolved strains. Crude extracts of a PHO13-overexpressing strain showed a higher phosphatase activity on xylulose-5-phosphate (X-5-P), suggesting that the dephosphorylation of X-5-P by Pho13p might generate a futile cycle with xylulokinase overexpression. While xylose consumption rates by the evolved strains improved substantially as compared to the parental strain, xylose metabolism was interrupted by accumulated acetate. Deletion of ALD6 coding for acetaldehyde dehydrogenase not only prevented acetate accumulation, but also enabled complete and efficient fermentation of xylose as well as a mixture of glucose and xylose by the evolved strain. These findings provide direct guidance for developing industrial strains to produce cellulosic fuels and chemicals.