The gene mel1, encoding alpha-galactosidase in Schizosaccharomyces pombe, and the gene bgl2, encoding and beta-glucosidase in Trichoderma reesei, were isolated and co-expressed in the industrial ethanol-producing strain of Saccharomyces cerevisiae. The resulting strains were able to grow on cellobiose and melibiose through simultaneous production of sufficient extracellular alpha-galactosidase and beta-glucosidase activity. Under aerobic conditions, the growth rate of the recombinant strain GC 1 co-expressing 2 genes could achieve 0.29 OD600 h(-1) and a biomass yield up to 7.8 g l(-1) dry cell weight on medium containing 10.0 g l(-1) cellobiose and 10.0 g l(-1) melibiose as sole carbohydrate source. Meanwhile, the new strain of S. cerevisiae CG 1 demonstrated the ability to directly produce ethanol from microcrystalline cellulose during simultaneous saccharification and fermentation process. Approximately 36.5 g l(-1) ethanol was produced from 100 g of cellulose supplied with 5 g l(-1) melibose within 60 h. The yield (g of ethanol produced/g of carbohydrate consumed) was 0.44 g/g, which corresponds to 88.0% of the theoretical yield.