A new xylose reductase encoding gene from Neurspora crassa was heterologously expressed in E. coli as a His-tag fusion protein and subsequently purified in high yield. This xylose reductase was shown to have a high turnover rate and catalytic efficiency, high stability at room temperature, broad pH profile, and a preference of NADPH over NADH. This enzyme is utilized in production of xylitol and other sugar alcohols such as sorbitol and also in the metabolic enhancement of organisms used for fermentation of plant biomass into ethanol.