This work evaluates sugarcane bagasse (SCB) conversion, in a biorefinery approach, to coproduce biodiesel and high value products using two novel mangrove fungi. On acid pre-treatment, sugarcane bagasse hydrolysate (SCBH) resulted in a xylitol yield of 0.51 g/g xylose consumed in 72 h by Williopsis saturnus. After SCB pretreatment, sugarcane bagasse residue (SCBR) was utilized using Aspergillus terreus for production of xylanase (12.74 U/ml) and cell biomass (9.8 g/L) which was extracted for single cell oil (SCO; 0.19 g/g) and transesterified to biodiesel. The FAME profile exhibited long chain SFAs and PUFAs with predicted biodiesel properties lying within the range specified by international standards. This biorefining approach of SCB utilization for co-production of xylitol, xylanase and SCO gains importance in terms of sustainability and eco-friendliness. (C) 2012 Elsevier Ltd. All rights reserved.