Yarrowia lipolytica is a promising production host for a wide range of molecules, but limited sugar consumption abilities prevent utilization of an abundant source of renewable feedstocks. In this study we created a Y. lipolytica strain capable of utilizing cellobiose as a sole carbon source by using endogenous promoters to express the cellodextrin transporter cdt-1 and intracellular -glucosidase gh1-1 from Neurospora crassa. The engineered strain was also capable of simultaneous co-consumption of glucose and cellobiose. Although cellobiose was consumed slower than glucose when engineered strains were cultured with excess nitrogen, culturing with limited nitrogen led to cellobiose consumption rates comparable to those of glucose. Under limited nitrogen conditions, the engineered strain produced citric acid as a major product and we observed greater citric acid yields from cellobiose (0.37g/g) than glucose (0.28g/g). Culturing with a sole carbon source of either glucose or cellobiose induced additional differences on cell physiology and metabolism and a link is suggested to evasion of glucose-sensing mechanisms through intracellular creation and consumption of glucose. We ultimately applied this cellobiose-utilization system to produce citric acid from bioconversion of crystalline cellulose through simultaneous saccharification and fermentation (SSF). Biotechnol. Bioeng. 2015;112: 1012-1022. (c) 2014 Wiley Periodicals, Inc.