Spent grains (SG), the residue remaining after extraction of wort, are a major by-product of brewing. This lignocelluose-rich biomass may provide a source of sugars for fuel ethanol fermentations. Dilute acid and enzyme treatments were developed to convert the hemicellulose and cellulose fractions to glucose, xylose and arabinose. Pretreatment of dried, milled grains with 0.16 N HNO3 at 121 °C for 15 min was chosen as the most suitable method for solubilizing grains before enzymatic digestion with cellulase and hemicellulase preparations. Solids loading concentrations (10%, 15% and 20% w/v) were compared and reducing sugar between 40 and 48 g (100 g SG)−1 was extracted. Hydrolysate, prepared from 20% SG, pretreated with 0.16 N HNO3, partially neutralized to pH 5–6 and digested with enzymes for 18 h, contained 27 g L−1 glucose, 16.7 g L−1 xylose and 11.9 g L−1 arabinose. Fermentation of this hydrolysate for 48 h by Pichia stipitis and Kluyveromyces marxianus resulted in 8.3 and 5.9 g L−1 ethanol corresponding to ethanol conversion yields of 0.32 and 0.23 g ethanol (g substrate)−1, respectively. Substrate utilization efficiency was less when compared with glucose/xylose mixtures in synthetic media, suggesting that yeast inhibitory compounds derived from SG were present in the hydrolysate.