BACKGROUND: Fuel grade ethanol (anhydrous ethanol) is considered to be an excellent alternative clean burning fuel to gasoline. It is now used as an additive to gasoline to enhance its octane number and combustibility. Owing to its high energy values, ethanol is the most promising future biofuel. Because of azeotrope formation, anhydrous ethanol cannot be achieved by conventional distillation. Diffusion distillation is one of the several processes that can be used to separate azeotropes. Diffusion distillation takes advantage of differences in relative rates of diffusion using inert gas as selective filter. RESULTS: Effect of vaporization temperature and feed composition on diffusion distillation of an ethanol-water mixture using air as the inert gas has been studied. A new quantity S-az(N-2/N-1) has been suggested to find the optimum vaporization temperature. In the present study this was found to be about 46 degrees C. The pseudo-azeotrope has been observed at 0.697 mole fraction of ethanol at a vaporization temperature of 50 degrees C. Separation is effected by diffusion distillation even at the azeotropic ethanol mole fraction of 0.894. The experimental results were compared with a Stefan-Maxwell equations based mathematical model and found to be in good agreement with theoretical results. CONCLUSIONS: Experimental results demonstrate that fuel grade ethanol can be produced by diffusion distillation. The new quantity S-az(N-2/N-1) is a key variable for vaporization temperature optimization. (C) 2011 Society of Chemical Industry