Lignocellulosic biomass, such as wood and agricultural residues, is an attractive material for fuel ethanol production. Our group focuses on the ethanol production through a pretreatment technology based on milling and nanofibrillation without separating cellulose, hemicellulose, and lignin components of biomass. To develop enzymatic hydrolysis and fermentation processes suitable for the pretreated samples, we have investigated the simultaneous hydrolysis of cellulose and hemicellulose using fungal enzymes and the ethanol fermentation in the hydrolyzate using genetically engineered industrial yeast. Acremonium cellulolyticus CF2612 possessing high cellulase productivity (18 FPU/ml) was obtained by random mutagenesis. Major enzymes produced were identified as cellobiohydrolase I and II. The enzymatic hydrolysis of pretreated samples revealed that a slight supplementation of hemicellulases (xylosidase for rice straw, and mannosidase and mannanase for softwood) dramatically increased hemicellulose digestibility (>70%) by the synergistic effect with cellulase. Enhancement of the hemicellulase activities suitable for hydrolysis of the pretreated biomass should be critical for the development of enzyme production system by fungi. Having the best performance in D-xylulose-to-ethanol conversion among the industrial yeast strains, IR-2 was selected as the host for genetic engineering toward xylose fermentation. MA-R4, which is our reference strain that was constructed by integration of xylose reductase, xylitol dehydrogenase and xylulokinase into the chromosomes of IR-2, showed high ethanol yield in the fermentation of lignocellulosic hydrolysate. Furthermore, the improvement of MA-R4 using redox-balance engineering and breeding technology will be presented. Acknowledgments: This work has been partly supported by the New Energy and Industrial Technology Development Organization (NEDO).