Hardwood spent sulfite liquor (HW SSL) is an organic waste produced from the pulping of hardwood by the sulfite process, and contains considerable amounts of pentose sugars, mainly xylose in addition to hexoses and several inhibitors. Pentose-fermenting yeasts (e.g. 'Candida shehatae') are able to ferment both hexoses and xylose but are sensitive to inhibitors. HW SSL tolerant mutants of 'Candida shehatae' were created by UV mutagenesis and screened on HW SSL gradient plates followed by diluted HW SSL. Mutants were better able to grow and ferment sugars in diluted HW SSL than 'Candida shehatae' wild type (VVT). The mutants and ' Candida shehatae' WT showed similar growth rate and growth yield in defined media with glucose and xylose and could ferment the major biomass sugars to similar yields of ethanol. The mutants can be further improved by additional random screening and ultimately be used for the efficient fermentation of biomass sugars to ethanol.