Sugarcane bagasse—a residue from sugar and ethanol production from sugar cane—is a potential raw material for lignocellulosic ethanol production. This material is high in xylan content. A prerequisite for bioethanol production from bagasse is therefore that xylose is efficiently fermented to ethanol. In the current study, ethanolic fermentation of steam-pretreated sugarcane bagasse was assessed in a simultaneous saccharification and fermentation (SSF) set-up using either Saccharomyces cerevisiae TMB3400, a recombinant xylose utilizing yeast strain, or Pichia stipitis CBS6054, a naturally xylose utilizing yeast strain. Commercial cellulolytic enzymes were used and the content of water insoluble solids (WIS) was 5% or 7.5%. S. cerevisiae TMB3400 consumed all glucose and large fraction of the xylose in SSF. Almost complete xylose conversion could be achieved at 5% WIS and 32°C. Fermentation did not occur with P. stipitis CBS6054 at pH 5.0. However, at pH 6.0, complete glucose conversion and high xylose conversion (>70%) was obtained. Microaeration was required for P. stipitis CBS6054. This was not necessary for S. cerevisiae TMB3400. Biotechnol. Bioeng. 2008;99: 783–790. © 2007 Wiley Periodicals, Inc.