Hydrolysates of lignocellulosic biomass contain glucose, xylose, arabinose, cellobiose, among other sugars. Effective utilization of these sugars remains challenging for microbial conversion, because most microorganisms consume such sugars sequentially with a strong preference for glucose. In the present study, the oleaginous yeast, Lipomyces starkeyi, was shown to consume cellobiose and xylose simultaneously and to produce intracellular lipids from cellobiose, xylose and glucose. In flask cultures with glucose, cellobiose or a mixture of cellobiose/xylose as carbon sources, overall substrate consumption rates were close to 0.6 g/L/h, and lipid coefficients were 0.19 g lipid/g sugar, respectively. This cellobiose/xylose co-fermentation strategy provides an opportunity to efficiently utilize lignocellulosic biomass for microbial lipid production, which is important for biorefinery and biofuel production.