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                                                                       EXHIBIT 5




                       Kramer, Levin, Naftalis & Frankel
                                 919 Third Ave.
                              New York, NY  10022

                                January 7, 1997

MAXXAM Group Holdings Inc.
5847 San Felipe, Suite 2600
Houston, Texas  77057-3010

         Re:     MAXXAM Group Holdings Inc.
                 Registration Statement on Form S-4
                 (Registration No. 333-18723)

Ladies and Gentlemen:

         We have acted as counsel to MAXXAM Group Holdings Inc., a Delaware
corporation (the "Company"), and MAXXAM Inc., a Delaware corporation (the
"Guarantor"), in connection with the preparation and filing of the above-
captioned Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), relating
to the proposed offer by the Company (the "Exchange Offer") to exchange
$130,000,000 aggregate principal amount of its 12% Series B Senior Secured
Notes due 2003 (the "New Notes") for a like amount of its outstanding 12%
Senior Secured Notes due 2003 (the "Old Notes").  The New Notes will be
guaranteed (the "Guaranty") on a senior unsecured basis by the Guarantor.  The
New Notes will be issued pursuant to an Indenture, dated December 23, 1996,
among the Company, the Guarantor, and First Bank National Association, as
trustee (the "Indenture").

         As such counsel, we have examined such corporate records, certificates
and other documents and such questions of law as we have considered necessary
or appropriate for the purposes of this opinion.  In rendering this opinion, we
have (a) assumed (i) the genuineness of all signatures on all documents
examined by us, (ii) the authenticity of all documents submitted to us as
originals, and (iii) the conformity to original documents of all documents
submitted to us as photostatic or conformed copies and the authenticity of the
originals of such copies; and (b) relied on (i) certificates of public
officials and (ii) as to matters of fact, statements and certificates of
officers of the Company.
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         We are attorneys admitted to the Bar of the State of New York, and we 
express no opinion as to the laws of any other jurisdiction other than the laws
of the United States of America, the State of New York and the General
Corporation Law of the State of Delaware.

         Based upon the foregoing, we are of the opinion that:

         1.      The New Notes have been duly authorized by the Company and,
         when issued and delivered in exchange for the Old Notes in the manner
         set forth in the Registration Statement and executed and authenticated
         in accordance with the terms and conditions of the Indenture (and
         assuming the due authorization, execution and delivery of the
         Indenture by each of the parties thereto), will constitute legal,
         valid and binding obligations of the Company.

         2.      The Guaranty of the Guarantor, when issued and delivered in
         connection with the exchange of the New Notes for the Old Notes in the
         manner described in the Registration Statement and when such New Notes
         are executed and authenticated as specified in the Indenture, will be
         duly issued and delivered and will constitute a legal, valid and
         binding obligation of the Guarantor.

         The above opinion is subject to and limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance or transfer or
other laws and court decisions, now or hereafter in effect, relating to or
affecting the rights of creditors generally.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the prospectus forming a part of the Registration Statement.  In
giving such consent we do not thereby concede that we are within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations promulgated thereunder.

                                           Very truly yours,



                                           /s/ Kramer, Levin, Naftalis & Frankel