The purpose of the present work was to evaluate the possibility of converting recycled paper sludge (RPS), an industrial residue stream with strong environmental impact, into valuable products. The approach used was based on the enzymatic conversion of major sludge components (cellulose and xylan) and the simultaneous (simultaneous saccharification and fermentation-SSF) or sequential (separate hydrolysis and fermentation-SHF) fermentation of the resulting sugars to ethanol. In the enzymatic hydrolysis step using Celluclast (R) 1.5 L supplemented with Novozym (R) 188, a degree of saccharification of 100% was achieved. In relation to ethanol production using the yeast Pichia stipitis CBS 5773, SHF and SSF process efficiencies were compared. A slightly higher conversion yield was attained on SHF, corresponding to an ethanol concentration of 19.6gL(-1), but 179h were needed. The SSF process was completed after 48h of incubation allowing the production of 18.6 gL(-1) of ethanol from 178.6 gL(-1) of dried RPS, corresponding to an overall conversion yield of 51% of the available carbohydrates on the initial substrate. These results demonstrate that the biological conversion of sludge to ethanol is efficient even with no pre-treatment or substrate supplementation. (c) 2007 Elsevier Ltd. All rights reserved.