There are currently few successful examples of using straw hemicellulose as a carbon source in the fermentation industry. In this paper, hemicellulose hydrolysates were recovered from steam-exploded wheat straw (SEWS) and used to produce microbial oil. The effects of the steam explosion treatment conditions, the elution temperature and the ratio of elution water to SEWS on sugar recovery were examined. A broth with 3.8 gl(-1) of reducing sugar and 22.3 gl(-1) of total soluble sugars was obtained with a 10-fold excess (w/w) of water at 40 degrees C to wash the SEWS treated under steam explosion conditions at 200 degrees C for 5 min. This broth was used to produce microbial oil by the oleaginous fungus Microsphaeropsis sp., which was able to secrete xylanase to degrade oligosaccharides from straw hemicellulose and accumulate microbial oil. Under optimized conditions, the oil concentration was 2.6 gl(-1). The yield of oil from sugar consumed was 0.14 g g(-1). The microbial oil produced by this research could be used as feedstock for biodiesel production because the microbial oil was primarily composed of neutral lipids. This research establishes a novel protocol for microbial oil production from straw hemicellulose. (C) 2011 Elsevier Ltd. All rights reserved.