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Present paper describes a process development for fractionation of holocellulose in rice straw into its monomeric sugars employing acid hydrolysis followed by enzymatic saccharification. Rice straw has been hydrolyzed at 140°C and 0.6 % v/v dilute sulfuric acid with 90 min holding time for maximum recovery of pentose monomer (12.52 g xylose/ 100 g biomass). Pentose stream was used for yeast cell biomass generation. Commercial cellulase resulted in 79±0.05 % saccharification efficiency with acid-hydrolyzed biomass. Fermentation of saccharified broth using thermophilic yeast Kluyveromyces sp. IIPE453 (MTCC 5314) with cell recycle produced ethanol with an overall yield and productivity of 93.5±0.05 % and 0.90±0.2 g/L/h, respectively, and with negligible residual sugar in fermentation broth. Lignin-rich residual biomass had a high gross calorific value and could be used as a source of clean gaseous fuel.