The fermentation of reducing sugars from hardwood (eucalypt) spent sulphite liquor (HSSL) into ethanol by Pichia (Scheffersomyces) stipitis is hindered by concomitant inhibitors of microbial metabolism. The conditions for the HSSL biological treatment step by Paecilomyces variotii were evaluated and optimised. Two different strategies of reactor operation were compared using single batch (B) and sequential batch reactor (SBR). Biological treatment of HSSL in the SBR revealed the best results with respect to the removal of microbial inhibitors. Also, most of inhibitory compounds, acetic acid, gallic acid, pyrogallol, amongst others, were removed from HSSL by P. variotii before the ethanol fermentation. The bio-detoxified HSSL was subjected to a successful fermentation by P. stipitis, attaining a maximum ethanol concentration of 2.4 g L(-1) with a yield of 0.24 g ethanol g sugars(-1). (C) 2011 Elsevier Ltd. All rights reserved.