To effectively utilize sugars during the fermentation process, it is important to develop a process that can minimize the generation of inhibiting compounds such as furans and acids, and a robust micro-organism that can co-ferment both glucose and xylose into products. In this study, the feasibility of efficient ethanol production was investigated using a combination of two approaches: two-stage autohydrolysis of biomass and fermentation using an engineered Saccharomyces cerevisiae to produce ethanol. When the hardwood chips were autohydrolyzed at 140 °C, followed by the second treatment at 180 °C, a higher yield of sugar conversion and fewer inhibitory effects on subsequent fermentation were achieved compared with the results from single-stage autohydrolysis. A higher overall yield of ethanol resulted by using an engineered yeast strain, SR8. This observation suggests the possibility of the feasible combination of two-stage autohydrolysis and the recombinant yeast.