Ascomycete yeasts that both ferment and assimilate xylose were reported previously as associates of insects living in woody substrates. Most notable have been reports of Pichia stipitis-like yeasts that are widely associated with the wood-boring beetle, Odontotaenius disjunctus (Coleoptera: Passalidae), in the eastern United States. Our continuing investigation of insect gut yeasts has lead to the discovery of two new xylose-fermenting yeasts that phylogenetic analysis places as sister taxa. The beetle hosts, O. disjunctus and Phrenapates bennetti (Coleoptera: Tenebrionidae), are similar in habitat and appearance, and the presence of similar gut yeasts is an additional common feature between them. Here we describe the new yeast genus Spathaspora, the type species S. passalidarum, and its sister taxon Candida jeffriesii and discuss their natural history, including a comparison with Pichia stipitis, another member of a guild of xylose-fermenting yeasts with similar metabolic traits. In addition a morphologically distinct yeast ascospore type is described for Spathaspora.