Cell immobilization has shown to be especially adequate for xylitol production. This work studies the suitability of the air lift bioreactor for xylitol production by Debaryomyces hansenii immobilized in Ca-alginate operating in fed-batch cultures to avoid substrate inhibition. The results showed that the air lift bioreactor is an adequate system since the minimum air flow required for fluidization was even lower than that leading to the microaerobic conditions that trigger xylitol accumulation by this yeast, also maintaining the integrity of the alginate beads and the viability of the immobilized cells until 3 months of reuses. Maximum productivities and yields of 0.43 g/l/h and 0.71 g/g were achieved with a xylose concentration of 60 g/l after each feeding. The xylose feeding rate, the air flow, and the biomass concentration at the beginning of the fed-batch operation have shown to be critical parameters for achieving high productivities and yields. Although a maximum xylitol production of 139 g/l was obtained, product inhibition was evidenced in batch experiments, which allowed estimating at 200 and 275 g/l the IC50 for xylitol productivity and yield, respectively. The remarkable production of glycerol in the absence of glucose was noticeable, which could not only be attributed to the osmoregulatory function of this polyol in conditions of high osmotic pressure caused by high xylitol concentrations but also to the role of the glycerol synthesis pathway in the regeneration of NAD(+) in conditions of suboptimal microaeration caused by insufficient aeration or high oxygen demand when high biomass concentrations were achieved.