Paper sludge is a solid by-product of pulping and paper-making operations that is currently disposed of primarily in landfills in the US.  Compared to other cellulosic feedstocks, paper sludge offers distinct advantages such as potential negative feedstock, no requirement for pretreatment to be made amenable to enzymatic hydrolysis, and integration of processes into a preexisting industrial infrastructure at the mill. In this presentation, we report results obtained from a simultaneous saccharification and fermentation system in which cellulose hydrolysis is mediated by exogenously added cellulase and fermentation to lactic acid is mediated by thermophilic Bacillus coagulans strains, which can utilize both glucose and xylose.  These include production of lactic acid in recoverable concentration, optimization of the medium for lactic acid production, optimization of enzyme loading by using different reactor configuration and preliminary economic analysis of the process profitability.