This research develops a new process for production of bioethanol from marine and freshwater algae based on hydrolysis using yeast rather than the established methods of enzyme and acid hydrolysis. Yeast were isolated and adapted specifically for this process and the effectiveness of this hydrolysis was evaluated. This method was then evaluated within a full ethanol production process involving ozone pretreatment, and both hydrolysis and fermentation using yeast, under different nutrient supplementation regimes. The process effectiveness was evaluated for species of freshwater (Spirogyra hyalina) and marine (Kappaphycus alvarezii) algae. The yeast-based hydrolysis method outperformed acid and enzyme hydrolysis for both species of freshwater and marine algae, with particularly significant results for the freshwater algae. In the whole of process treatment, the yeast-based hydrolysis approach was effective when combined with ozone pretreatment for marine algae, and without any pretreatment for freshwater algae. The highest ethanol yield was achieved through fermentation with a yeast extract supplement present. These results indicate that ozone pretreatment, hydrolysis using yeast, and fermentation with the use of yeast extract as a nutrient are promising methods for economic ethanol production from seawater algae, and for freshwater algae where ozone pretreatment is not required.