In the wake of rapid industrialization and burgeoning transportation networks, the escalating demand for fossil fuels has accelerated the depletion of finite energy reservoirs, necessitating urgent exploration of sustainable alternatives. To address this, current research is focusing on renewable fuels like second-generation bioethanol from agricultural waste such as sugarcane bagasse. This approach not only circumvents the contentious issue of food-fuel conflicts associated with biofuels but also tackles agricultural waste management. In the present study indigenous yeast strain, Clavispora lusitaniae QG1 (MN592676), was isolated from rotten grapes to ferment xylose sugars present in the hemicellulose content of sugarcane bagasse. To liberate the xylose sugars, dilute acid pretreatment was performed. The highest reducing sugars yield was 1.2% obtained at a temperature of 121°C for 15min, a solid-to-liquid ratio of 1:25 (% w/v), and an acid concentration of 1% dilute acid H2SO4 that was significantly higher (P < 0.001) yield obtained under similar conditions at 100°C for 1h. The isolated strain was statistically optimized for fermentation process by Plackett-Burman design to achieve the highest ethanol yield. Liberated xylose sugars were completely utilized by Clavispora lusitaniae QG1 (MN592676) and gave 100% ethanol yield. This study optimizes both fermentation process and pretreatment of sugarcane bagasse to maximize bioethanol yield and demonstrates the ability of isolated strain to effectively utilize xylose as a carbon source. The desirable characteristics depicted by strain Clavispora lusitaniae shows its promising utilization in management of industrial waste like sugarcane bagasse by its conversion into renewable biofuels like bioethanol.