Dilute acid as well as water only (hydrothermal) pretreatments often lead to a significant hemicellulose loss to soluble furans and insoluble degradation products, collectively termed as chars and/or pseudo-lignin. In order to understand the factors contributing to reducing sugar yields from pretreated biomass and the possible influence of hemicellulose derived pseudo-lignin on cellulose conversion at the moderate to low enzyme loadings necessary for favorable economics, dilute acid pretreatment of Avicel cellulose alone and mixed with beechwood xylan or xylose was performed at various severities. Following pretreatment, the solids were enzymatically hydrolyzed and characterized for chemical composition and physical properties by NMR, FT-IR, and SEM imaging. It was found that hemicelluloses (xylan) derived-pseudo-lignin was formed at even moderate severities and that these insoluble degradation products can significantly retard cellulose hydrolysis. Furthermore, although low severity (CSF ∼ 1.94) dilute acid pretreatment of a xylan–Avicel mixture hydrolyzed most of the xylan (98%) and produced negligible amounts of pseudo-lignin, enzymatic conversion of cellulose dropped significantly (>25%) compared to cellulose pretreated alone at the same conditions. The drop in cellulose conversion was higher than realized for cellulase inhibition by xylooligomers reported previously. Plausible mechanisms are discussed to explain the observed reductions in cellulose conversions. Biotechnol. Bioeng. 2013; 110: 737–753. © 2012 Wiley Periodicals, Inc.