The goal of this study was to evaluate the effect of two-step whole rye meal fractionation by means of sieving and alkaline extraction on the efficiency of ethanol production process in an integrated biorefinery scenario. It was found that sieving of whole rye meal with the sieve of 1250 μm openings resulted in obtaining a fraction with increased starch content and slight reduction of arabinoxylan. Under the optimized conditions (solids loading, temperature, pH, and time) of alkaline extraction, a purified starch fraction with 0.75 g g−1 starch with negligible amounts of protein and arabinoxylan was obtained, together with a protein isolate with ca. 0.4 g g−1 protein content. The mashes obtained from purified starch fraction had significantly lower viscosities and suspended solids content in comparison to whole rye meal mashes. Simultaneous saccharification and fermentation of purified starch fraction mash yielded 118.6 g L−1 ethanol with 84.5% efficiency, while 84.5 g L−1 ethanol with 79.2% efficiency was obtained for whole rye meal mash. The fungal cultivation of fractionation process by-products resulted in obtaining more ethanol than the use of whole rye meal stillage. The mass balance showed that the fractionation process yielded ca. 111 g more ethanol from kg of rye than whole meal process.