The utilization of cellulose from one ton of lignocellulose for ethanol production would yield 150–250 kg of hemicelluloses. The total soluble solids in the hemicellulose fraction (HF) obtained with the Universite de Sherbrooke (UdeS) process contained about 56% carbohydrates. These carbohydrates were present in the form of oligomers of various sugars, predominantly xylose. All the test fungi,Chaetomium cellulolyticum, C. cellulolyticum (asporogenous mutant) andPleurotus sajor-caju, were capable of utilizing all the carbohydrates present in HF.C. cellulolyticum gave the highest amount of protein (7 g/l) from 19 g carbohydrates/l. The yield of protein was higher than expected, indicating that carbon compounds other than reducing sugars present in HF might have been consumed for fungal growth. The inhibitory effect of toxic compounds on protein production increased with an increase in concentration of soluble solids in HF. The inhibitory effect was overcome by increasing the pH of the medium to 6.0 or 7.0. Fungal protein production from hemicelluloses will give extra revenue in our integrated approach for ethanol production from lignocelluloses.