Pretreatment of paddy straw with 2% sodium hydroxide at 15 psi for 1 h resulted in 83% delignification. The hydrolysis of alkali treated paddy straw with a commercial preparation of cellulase for 2 h at 50°C resulted in release of 65% total reducing sugars. Maximum sugars were released at enzyme loading of 1.5% (v/v). The fermentation of hydrolysate supplemented with nutrients by S. cerevisiae resulted in the production of 20–30 g L−1 ethanol after 48 h incubation which was further improved with addition of yeast nitrogen base and inoculated with 1% (w/v) yeast cells.