Ethanol producing from biomass has become an interesting substitute to petrolium in the struggle against raised levels of fossil carbon dioxide emission to the atmosphere. The biotechnological conversion of biomass into fuels requires hydrolysis of the polysaccharide fraction into monomeric sugars. This study was aimed at the optimization of the processing conditions of the hydrolysis step of bio-ethanol production to produce high fermentable sugar. In this study dilute acid hydrolysis, temprature and residunce time were used as process parameters. Response SurfaceMethodology (RSM) was employed for the optimization of hydrolysis conditions. A 3 (three) level design was used to develop a statistical model for the optimization of process variables. The raw material, <i>P. juliflra</i> stem, was collected from Afar region eastern part of Ethiopia specifically Wrer Agricultural Research Center. The optimal hydrolysis conditions that resulting for the maximum total reducing sugar concentration were at acid concentration; 2% (v/v), temperature; 128.01°C and hydrolysis time; 55 minutes. Under these conditions, the total reducing sugar concentration was obtained to be 184.716mg/g.