The conventional materials for constructing bioreactors for ethanol production are stainless and cladded carbon steel because of the corrosive behaviour of the fermenting media. As an alternative and cheaper material of construction, a novel textile bioreactor was developed and examined. The textile, coated with several layers to withstand the pressure, resist the chemicals inside the reactor and to be gas-proof was welded to form a 30 L lab reactor. The reactor had excellent performance for fermentative production of bioethanol from sugar using baker’s yeast. Experiments with temperature and mixing as process parameters were performed. No bacterial contamination was observed. Bioethanol was produced for all conditions considered with the optimum fermentation time of 15 h and ethanol yield of 0.48 g/g sucrose. The need for mixing and temperature control can be eliminated. Using a textile bioreactor at room temperature of 22 °C without mixing required 2.5 times longer retention time to produce bioethanol than at 30 °C with mixing. This will reduce the fermentation investment cost by 26% for an ethanol plant with capacity of 100,000 m3 ethanol/y. Also, replacing one 1300 m3 stainless steel reactor with 1300 m3 of the textile bioreactor in this plant will reduce the fermentation investment cost by 19%.