For the citrus processing industry the disposal of fresh peels has become a major concern for many factories. Orange peels are the major solid by-product. Dried orange peels have a high content of pectin, cellulose and hemicellulose, which make it suitable as fermentation substrate when hydrolyzed. The present work aims at utilizing orange peels for the production of ethanol by using the fungus Mucor indicus. Hence, producing a valuable product from the orange peel waste. The biomass growth was also examined, since the biomass of the fungus can be processed into chitosan, which also is a valuable material. The work was first focused on examining the fungus ability to assimilate galacturonic acid and several other sugars present in orange peel hydrolyzate (fructose, glucose, galactose, arabionose, and xylose). Fructose and glucose are the sugars which are consumed the fastest whereas arabinose, xylose and galacturonic acid are assimilated much slower. One problem when using orange peels as raw material is its content of peel oils (mainly D-limonene), which has an immense antimicrobial effect on many microorganism even at low concentrations. In order to study M. indicus sensitivity to peel oil the fungus was grown in medium containing different concentrations of D-limonene. At very low limonene concentrations the fungal growth was delayed only modestly, hence a couple of hours when starting from spores and almost nothing when starting with biomass. Increasing the concentration to 0.25% (v/v) and above halted the growth to a large extent. However, the fungus was able to grow even at a limonene concentration of 1.0%, although, at very reduced rate. Cultivations started from spore-solution were more sensitive than those started with biomass. Orange peels were hydrolyzed by two different methods to fermentable sugars, namely by dilute acid hydrolysis (0.5% (v/v) H2SO4) at 150 °C and by enzymatic hydrolysis by cellulase, pectinase and β- glucosidase. The fungus was able to produce ethanol with a maximum yield of about 0.36 g/g after 24 h when grown on acid hydrolyzed orange peels both by aerobic and anaerobic cultivation. A preliminary aerobic cultivation on enzymatic hydrolyzed orange peels gave a maximum ethanol yield of 0.33 g/g after 26 h. The major metabolite produced during the cultivations was ethanol. Apart from ethanol, glycerol was the only component produced in significant amounts. In cultivations performed aerobically on acidand enzymatic hydrolyzed orange peels the glycerol yields were 0.048 g/g after 24 h. Two different techniques were also examined in order to evaluate if the methods could be use as biomass determining methods when solid particles are present in the culture medium. The problem with solid particles is that they will be buried inside the fungal biomass matrix. Hence making separation impossible prior to dry weight determination in the ordinary way. However, none of the methods involving chitin extraction or chitosan extraction did show any good results. The results from the present work are rather clear, M. indicus was able to grow and produce both ethanol and biomass even when limonene was present in the culture medium. The maximum ethanol yield was achieved after about 24 h in cultivations performed on both acid hydrolyzed and enzymatic hydrolyzed orange peels. However, in order to say if the method can be applicable at industrial scale and made economically feasible the subject has to be investigated further.