Unsorted, mixed waste office paper (MWOP) is an excellent substrate for conversion into fuel ethanol using a recombinant strain of Klebsiella oxytoca which ferments cellobiose and cellotriose to ethanol at near theoretical yields, eliminating the need for supplemental beta-glucosidase. This organism was tested with commercial fungal cellulase in optimized simultaneous saccharification and fermentation experiments (SSF) using MWOP as a substrate (pH 5-5.2, 35 degrees C). Similar rates and yields were obtained with dilute acid-pulped (hydrolysis of hemicellulose) and water-pulped MWOP on a dry weight basis although viscosity was reduced by the acid pretreatment. In simple batch fermentations, 40 g/L ethanol was produced after 48-72 h with 100 g/L MWOP and 1000 filter paper units (FPU) of cellulase/L, a yield of 550 L of ethanol metric ton. Cellulase usage was further reduced by recycling SSF residues containing bound enzymes in multistage fermentations. This approach reduced the requirement for fungal cellulase while retaining rapid ethanol production and high ethanol yield. In our optimal design, broths containing an average of 39.6 g/L ethanol were produced in three successive stages with an average fermentation time of 80 h (567 FPU of fungal cellulase/L; 6.1 FPU/g of substrate). This represents a yield of 0.426 g of ethanol/g of substrate, 539 L/metric ton, 129 gal/U.S. ton. MWOP contains approximately 90% carbohydrate. Thus the combined efficiency for saccharification and fermentation to ethanol was 83.3% of the theoretical maximum.