In the production of ethanol from lignocellulosics, large quantities of water are needed in various process steps. In industrial processes, recycling of process streams is necessary to minimise fresh water requirements and decrease the amount of wastewater produced. This leads to increases in various substances, both volatile and non-volatile which inhibit fermentation. In the present Study ethanol was produced from softwood in a bench-scale process development unit. The stillage stream from the distillation step was fractionated by evaporation and various evaporation fractions characterised and their inhibitory effect on fermentation investigated. irt was found that the volatile fractions have no negative effect on the fermentation while the non-volatile fraction inhibited fermentation and resulted in a decreased yield. Simulation of a six-effect evaporation unit based on the experimental data shows that the intermediate evaporation condensate fractions are most suited for disposal. The chemical and biological oxygen demands are only about 10% of the value in the stillage stream. Evaporation has been shown to be an effective way to drastically diminish the build-up of inhibitory compounds when process streams are recirculated, but the energy demand is high. Various process configurations to reduce the energy demand are suggested.