The cellobiose phosphorylase (cepA) gene from Clostridium stercorarium was cloned and successfully expressed under transcriptional control of the phosphoglycerate kinase gene (PGK1) promoter and terminator in Saccharomyces cerevisiae Y294. The recombinant CepA enzyme showed optimal activity at 60 degrees C and pH 5 and displayed a Km value of 92.85 mM and 1.69 mM on cellobiose and pNPG, respectively. A codon-optimised synthetic cepA gene was also expressed; however, it did not enhance cellobiose utilisation. Transport of cellobiose was subsequently facilitated through the heterologous expression of the lac12 of Kluyveromyces lactis. Strains co-producing the heterologous CepA and Lac12 were able to grow on cellobiose as sole carbon source. This is the first report of successful intracellular utilisation of cellobiose by S. cerevisiae producing a cellobiose phosphorylase and of cellobiose transport into S. cerevisiae via the K. lactis lac12 encoded permease.