In the process of making ethanol from lignocellulosic materials, compounds inhibitory to microorganisms are generated during steam pretreatment of the wood. Water-soluble inhibitors and pentoses are liberated and washed from the cellulose structure which is further enzymatically hydrolyzed. To make the process economically feasible, rite pentoses have to be fermented to ethanol. A major drawback with the pentose-fermenting organisms that have been suggested for this purpose is that they do not tolerate an inhibitory environment and there fore, the pentose stream has to be detoxified prior to fermentation. An alternative use of the hemicellulose hydrolysate obtained after steam;pretreatment of willow is to use it for. enzyme production by the cellulolytic fungus Trichoderma reesei. The sugars in the pentose function are almost completely utilized, and simultaneously the hemicellulose hydrolysate is detoxified and can be recirculated in rite process to minimize the need for freshwater.