Conversion of paper sludge to ethanol was investigated with the objective of operating under conditions approaching those expected of an industrial process. Major components of the bleached Kraft sludge studied were glucan (62 wt.%, dry basis), xylan (11.5%), and minerals (17%). Complete recovery of glucose during compositional analysis required two acid hydrolysis treatments rather than one. To avoid the difficulty of mixing unreacted paper sludge, a semicontinuous solids-fed laboratory bioreactor system was developed. The system featured feeding at 12-h intervals, a residence time of 4 days, and cellulase loading of 15 to 20 FPU/g cellulose. Sludge was converted to ethanol using simultaneous saccharification and fermentation (SSF) featuring a β-glucosidase-supplemented commercial cellulase preparation and glucose fermentation by Saccharomyces cerevisiea. SSF was carried out for a period of 4 months in a first-generation system, resulting in an average ethanol concentration of 35 g/L. However, steady state was not achieved and operational difficulties were encountered. These difficulties were avoided in a retrofitted design that was operated for two 1-month runs, achieving steady state with good material balance closure. Run 1 with the retrofitted reactor produced 50 g/L ethanol at a cellulose conversion of 74%. Run 2 produced 42 g/L ethanol at a conversion of 92%. For run 2, the ethanol yield was 0.466 g ethanol/g glucose equivalent fermented and >94% of the xylan fed to the reactor was solubilized to a mixture of xylan oligomers and xylose.