Size reduction of microcrystalline cellulose (MCC, Avicel® PH-101) powder by ball milling was poorly effective, particularly in the presence of sodium lauryl sulphate (SLS), which tended to form a protective foam. Ultrasonic homogenisation of an aqueous suspension more readily produced ultra-fine MCC, even in the presence of the surfactant and two other de-aggregating agents, and factorial experimentation was used to optimise the process. The product was recovered by spray-drying and readily redispersed in water without re-aggregation. Two new grades of ultra-fine MCC, prepared by an optimised treatment with or without 1% SLS, were characterised by a range of techniques in comparison to the starting coarser grade, Avicel® PH-101. Mercury porosimetry and scanning electron microscopy confirmed the less porous and smaller particle size of the new grades, where deposition of SLS as a coating was evident. Surface area determination confirmed that the size-reduced grades had larger specific surface areas, particularly the SLS treated material. Low temperature DSC and X-ray diffraction studies suggested that the new ultra-fine grades were more amorphous. Collectively the results indicate that the new grades should have unique functionality, possibly of benefit in pharmaceutical formulation.