Simultaneous Saccharification and Fermentation (SSF) experiments were carried out on agricultural residues using culture filtrate of Sclerotium rolfsii, which produces high levels of cellulases and hemicellulases for the saccharification of rice straw and bagasse, and Candida shehatae-the D-xylose fermenting yeast, and Saccharomyces cerevisiae, both separately and in coculture, for fermenting the released sugars. The coculture system showed efficient utilization of hydrolyzed sugars with 30-38% and 10-13% increase in ethanol production as compared to C. shehatae and S. cerevisiae, respectively, when cultivated separately. SSF simulation studies were carried out using standard sugar mixtures of glucose, xylose, and cellobiose. Both organisms could not use cellobiose, whereas glucose was used preferentially. C. shehatae was capable of utilizing xylose in the presence of glucose. © 1990 Humana Press Inc.