Disposal of sludge from deinking mills represents a significant proportion of operating costs. Bioconversion of the cellulosic fraction of deinking sludge (DIS) to ethanol greatly reduces disposal costs while producing an environmentally friendly fuel. In this study, the cellulosic fraction of newsprint and deinking sludge was hydrolysed to produce fermentable sugars. For newsprint, a particle size of 1 to 1.5 mm provided optimal reaction rates in batch reactors over practical hydrolysis times, and reducing sugar concentrations as high as 35 g/L could be achieved using a fed-batch reactor configuration. For both newsprint and DIS, the hydrolysis rate increased nonlinearly with enzyme loading. Tween-80 only marginally improved sugar production but was able to release sugars from cellulosic substrates in the absence of lytic enzymes, in an amount proportional to the surfactant concentration and the substrate particle size. DIS was relatively recalcitrant to enzymatic hydrolysis, possibly due in part to inhibition by hydrophobic constituents.