A complete process for the production of bioethanol and fungal biomass from spruce and birch was investigated. The process included milling, pretreatment with N-methylmorpholine-N-oxide (NMMO), washing of the pretreated wood, enzymatic hydrolysis, and cultivation of the zygomycetes fungi Mucor indicus. Investigated factors included wood chip size (0.5-16 mm), pretreatment time (1-5 h), and scale of the process from bench-scale to 2 m high airlift reactor. Best hydrolysis yields were achieved from wood chips below 2 mm after 5 h of pretreatment. Ethanol yields (mg/g wood) of 195 and 128 for spruce, and 175 and 136 for birch were achieved from bench-scale and airlift, respectively. Fungal biomass yields (mg/g wood) of 103 and 70 for spruce, and 86 and 66 for birch from bench scale and airlift respectively were simultaneously achieved. NMMO pretreatment and cultivation with M. indicus appear to be a good alternative for ethanol production from birch and spruce.