Hot-compressed water treatment of lignocellulose liberates numerous inhibitors that prevent ethanol fermentation of yeast Saccharomyces cerevisiae. Glycolaldehyde is one of the strongest fermentation inhibitors and we developed a tolerant strain by overexpressing ADH1 encoding an NADH-dependent reductase; however, its recovery was partial. In this study, to overcome this technical barrier, redox cofactor preference of glycolaldehyde detoxification was investigated. Glycolaldehyde-reducing activity of the ADH1-overexpressing strain was NADH-dependent but not NADPH-dependent. Moreover, genes encoding components of the pentose phosphate pathway, which generates intracellular NADPH, was upregulated in response to high concentrations of glycolaldehyde. Mutants defective in pentose phosphate pathways were sensitive to glycolaldehyde. Genome-wide survey identified GRE2 encoding a NADPH-dependent reductase as the gene that confers tolerance to glycolaldehyde. Overexpression of GRE2 in addition to ADH1 further improved the tolerance to glycolaldehyde. NADPH-dependent glycolaldehyde conversion to ethylene glycol and NADP+ content of the strain overexpressing both ADH1 and GRE2 were increased at 5 mM glycolaldehyde. Expression of GRE2 was increased in response to glycolaldehyde. Carbon metabolism of the strain was rerouted from glycerol to ethanol. Thus, it was concluded that the overexpression of GRE2 together with ADH1 restores glycolaldehyde tolerance by augmenting the NADPH-dependent reduction pathway in addition to NADH-dependent reduction pathway. The redox cofactor control for detoxification of glycolaldehyde proposed in this study could influence strategies for improving the tolerance of other fermentation inhibitors.