Rice is a staple food crop for most of the world's population, with a global production of 730 MT/yr and a massive generation of rice straw (RS) as a subsequent waste by-product. There is currently no sustainable method for managing the large amount of RS produced, 741–1111 MT/yr (290 kg RS/ton of milled rice). Most of it is either left on the ground or burned on site, which has several ecological, health, and environmental consequences (Louis et al., 2022; Toan et al., 2022). Moreover, straw burning culminates in the accumulation of atmospheric contaminants, such as carbon monoxide, carbon dioxide, volatile organic compounds, oxides of sulphur and, polycyclic aromatic hydrocarbons which deteriorates the air quality and crop yield (Li et al., 2023). Hence, there is an urgent need to develop large-scale conversion technologies to valorize RS for the development of commercially relevant value-added products such as xylitol. The biotransformation of xylose into xylitol from hemicellulose of lignocellulosic biomass such as rice straw is also of interest to modern biorefineries, as it can be processed into a variety of bio-based chemical products after the cellulosic fraction has been used for ethanol production. According to the US Department of Energy, xylitol is one of the top twelve carbohydrate-derived chemicals with the potential to be a co-product of plant biomass-led bio-refinery (Vallejos and Area, 2017) and, also with lactic acid, which is one of the most advanced productions from lignocellulosic biomass (Baptista and Domingues, 2022). Xylitol has been approved for use in food products in over 50 countries for dietary purposes, particularly for food, pharmaceutical and odontological applications. Additionally, xylitol also possesses good stabilizing, moisturizing and cryoprotectant properties and has applicability in cosmetics and polymer industries too (Umai et al., 2022). Currently, the annual market sale of xylitol is $823.6 million, with a projected increase to $1.37 billion by 2025(Hernández-Pérez et al., 2019). Commercially, xylitol production entails catalytic hydrogenation of D-xylose under extremely high temperature and pressure conditions, making the entire process very expensive and energy intensive. The biotechnological route allows for cheaper xylitol production while also allowing for the sustainable use of excess RS. Factors influencing microbial xylitol production include initial xylose concentration, the presence of other monosaccharides (primarily glucose and arabinose), process parameters (pH, temperature, oxygen supply, etc.), and the presence of microbial inhibitors (organic acids, furans, and phenolics), among others. Oxygen is required for yeasts to metabolize xylose, as it is linked to ATP formation, co-enzyme regeneration, and sugar transport throughout the oxidative phosphorylation pathway (Ahuja et al., 2020; Tizazu et al., 2018). On one hand, high shaking speed promotes cell biomass growth, while on the other it is detrimental to xylitol concentration as the latter is only accumulated under low oxygen conditions (Ding and Xia, 2006). This issue may be solved by achieving a balance between biomass growth and xylitol accumulation during the elongated stationary phase under microaerobic conditions. Furthermore, RS must be pretreated before it can be used for yeast-mediated xylitol production, and the composition of RS hydrolysate (RSH) directly influences the microbe's fermentation performance, cell biomass formation, and, ultimately, xylitol production (Singh, Arya and Krishania, 2021; Kaur et al., 2023). Levulinic and formic acids are produced during pretreatment as a result of furan decomposition, whereas acetic acid is produced by the release of acetyl groups from hemicelluloses. HMF and furfural are formed as a result of hexose and pentose degradation respectively, in addition to other phenolic compounds produced by lignin degradation. All these compounds act cumulatively to either deter or decrease xylitol production by microbes (Silva et al., 2013; Brás et al., 2014). Additionally, due to the inherently low xylose amount present in RS, 15.10–19.0% (w/w) as compared to other lignocellulosic biomasses such as corn cob, 28.0- 31.1% (w/w), and sugarcane bagasse, 21.80–27.0% (w/w), it needs to be extensively treated and concentrated to achieve the desirable xylose level, which is accompanied by a rise in the total inhibitor amount as well (Silva et al., 2010, Silva et al., 2015, Parades et al., 2015; Pippo et al., 2011). To facilitate low-cost fermentation operations, it is desirable to isolate novel yeast strains with good xylose to xylitol conversion ability and inhibitor tolerance (Silveira et al., 2020; Lopez et al., 2021). Candida sp. is the main xylitol producer; however, some of its species are also considered opportunistic pathogens, limiting its overall applicability, especially in food-led industries (Abdelgalil et al., 2021). In present bioconversion study, the two-step agitation and aeration pattern for xylitol synthesis improvement was investigated, beginning with a shake flask, and progressing to a 3L batch bioreactor, for aggrandized xylitol synthesis by considering all operational parameters. This work also studied the effects of compositional influence of RS hydrolysate at different concentrations on the behaviour of M. caribbica. The potential of wild isolate M. caribbica CP02 has also been validated, which produced remarkable xylitol yield from minimally processed RS acidic hydrolysate at high initial xylose and total inhibitor concentration, paving the way for an efficient bioprocess for commercialization.