Pretreatment of sugar cane bagasse is essential for a simultaneous saccharification and fermentation (SSF) process which uses recombinant Klebsiella oxytoca strain P2 and Genencor Spezyme CE. Strain P2 has been genetically engineered to express Zymomonas mobilis genes encoding the ethanol pathway and retains the native ability to transport and metabolize cellobiose (minimizing the need for extracellular cellobiase). In SSF studies with this organism, both the rate of ethanol production and ethanol yield were limited by saccharification at 10 and 20 filter papaer units (FPU) g−1 acid-treated bagasse. Dilute slurries of biomass were converted to ethanol more efficiently (over 72% of theoretical yield) in simple batch fermentations than slurries containing high solids albeit with the production of lower levels of ethanol. With high solids (i.e., 160 g acid-treated bagasse L−1), a combination of 20 FPU cellulase g−1 bagasse, preincubation under saccharification conditions, and additional grinding (to reduce particle size) were required to produce ca. 40 g ethanol L−1. Alternatively, almost 40 g ethanol L−1 was produced with 10 FPU cellulase g−1 bagasse by incorporating a second saccharification step (no further enzyme addition) followed by a second inoculation and short fermentation. In this way, a theoretical ethanol yield of over 70% was achieved with the production of 20 g ethanol 800 FPU−1 of commercial cellulase. © 1994 John Wiley & Sons, Inc.