Sugarcane bagasse hydrolysis with 2.5% (v/v) HCl yielded 30.29g/L total reducing sugars along with various fermentation inhibitors such as furans, phenolics and acetic acid. The acid hydrolysate when treated with anion exchange resin brought about maximum reduction in furans (63.4%) and total phenolics (75.8%). Treatment of hydrolysate with activated charcoal caused 38.7% and 57.5% reduction in furans and total phenolics, respectively. Laccase reduced total phenolics (77.5%) without affecting furans and acetic acid content in the hydrolysate. Fermentation of these hydrolysates with Candida shehatae NCIM 3501 showed maximum ethanol yield (0.48g/g) from ion exchange treated hydrolysate, followed by activated charcoal (0.42g/g), laccase (0.37g/g), overliming (0.30g/g) and neutralized hydrolysate (0.22g/g).