Because pretreatment of biomass with hot water only in differential flow systems offers very digestible cellulose and potentially less inhibition by liquid hydrolysate, solids and liquid hydrolysate from bagasse pretreated with hot water were fed to a batch cellulase production system using the Rut C30 strain of Trichoderma reesei to determine the suitability of these substrates for cellulase production. The organism was found to be sensitive to inhibitors in the liquid hydrolysate but could be adapted to improve its tolerance. In addition, filtering of the material reduced inhibitory effects. The organism was also sensitive to some component in the solids, and they had to be washed heavily to achieve good growth and cellulase production rates. Even then, a lag was found before enzyme production would commence on pretreated solids whereas no such lag was experienced with Solka Floc. However, once enzyme production began, as high and even somewhat greater cellulase productivities were realized with washed pretreated solids. Adding lignin to Solka Floc delayed enzyme production, suggesting that lignin or other materials in the lignin solids could cause the lag observed for pretreated bagasse, but more studies are needed to resolve the actual reason for this delay.