The global trade in wood pellets continues to grow. However, their potential as a feedstock for large scale cellulosic ethanol production has not been evaluated. We anticipated that the reduced moisture content and pressure exerted on the wood biomass during the pelletisation process would result in some carbohydrate loss as well as making the biomass more recalcitrant to pretreatment and subsequent hydrolysis. However, when softwood chips and pellets were steam pretreated at medium severity, little hemicellulose loss occurred while more than two-thirds of the cellulose present in the cellulose rich water insoluble fractions were hydrolysed (at 20 FPU cellulase/g cellulose). In addition, prior steaming substantially reduced the particle size of the wood chips enabling direct pelletisation without the need for grinding. Surprisingly, it was also possible to apply a single steam pretreatment to facilitate both pelletisation and subsequent enzymatic hydrolysis without the need for a further pretreatment step. (C) 2012 Elsevier Ltd. All rights reserved.