Kappaphycus alvarezii is the most widely cultivated algae species globally because of its main use in carrageenan production. Waste resulting from carrageenan production still contains high levels of cellulose, which is potentially convertible into fermentable sugar. However, the commercial viability of sugar conversion from algae waste is limited by the high cost of the hydrolysis required to break down the algae waste. This study aims to develop a new hydrolysis method, through the adoption of fungal algal cell disruption to produce a fermentable sugar. The fungus Trichoderma reseei was developed as a new pretreatment method. It was chosen for its superior inherent properties, including low chemical input and environmental friendliness. This study develops a method for fungal pretreatment of algae processing waste. We investigated the effects of substrate concentration, inoculum size, and reaction time on sugar production using full factorial design. The results showed that substrate concentration, inoculum size, and reaction time affect sugar production. This study demonstrates that sugar production from algae proccessing waste can reach more than 70% under optimum conditions. These results indicate the potential of microbial cellullase as an economically friendly pretreatment for sugar production from algae processing waste.