A novel adaptive surrogate modeling-based algorithm is proposed to solve the integrated scheduling and dynamic optimization problem for sequential batch processes. The integrated optimization problem is formulated as a large scale mixed-integer nonlinear programming (MINLP) problem. To overcome the computational challenge of solving the integrated MINLP problem, an efficient solution algorithm based on the bilevel structure of the integrated problem is proposed. Because processing times and costs of each batch are the only linking variables between the scheduling and dynamic optimization problems, surrogate models based on piece-wise linear functions are built for the dynamic optimization problems of each batch. These surrogate models are then updated adaptively, either by adding a new sampling point based on the solution of the previous iteration, or by doubling the upper bound of total processing time for the current surrogate model. The performance of the proposed method is demonstrated through the optimization of a multiproduct sequential batch process with seven units and up to five tasks. The results show that the proposed algorithm leads to a 31% higher profit than the sequential method. The proposed method also outperforms the full space simultaneous method by reducing the computational time by more than four orders of magnitude and returning a 9.59% higher profit. (c) 2015 American Institute of Chemical Engineers