In dilute acid pretreatment of lignocellulosic biomass, lignin has been shown to form droplets that deposit on the cellulose surface and retard enzymatic digestion of cellulose (Donohoe et al., 2008; Selig et al., 2007). However, studies of this nature are limited for hydrothermal pretreatment, with the result that the corresponding mechanisms that inhibit cellulosic enzymes are not well understood. In this study, scanning electron microscope (SEM) and wet chemical analysis of solids formed by hydrothermal pretreatment of a mixture of Avicel cellulose and poplar wood showed that lignin droplets from poplar wood relocated onto the Avicel surface. In addition, nuclear magnetic resonance (NMR) showed higher S/G ratios in deposited lignin than the initial lignin in poplar wood. Furthermore, the lignin droplets deposited on Avicel significantly impeded cellulose hydrolysis. A series of tests confirmed that blockage of the cellulose surface by lignin droplets was the main cause of cellulase inhibition. The results give new insights into the fate of lignin in hydrothermal pretreatment and its effects on enzymatic hydrolysis. Biotechnol. Bioeng. 2014;111: 485–492. © 2013 Wiley Periodicals, Inc.