Rice straw is produced in large quantity throughout the world. Rice straw is a leading feedstock for bioethanol production. Diluted ammonia pretreatment for one week at room temperature was found to be effective pretreatment. This pretreated rice straw was acid hydrolyzed and subsequently fermented with Saccharomyces cerevisiae CP11 strain. 1.5% ammonia pretreatment at room temperature for one week resulted 82.4% delignification and 78.49% of acid hydrolysis. Acid hydrolysate was fermented with maximum ethanol concentration 5.70 % with an ethanol yield of 0.46g/g and fermentation efficiency of 90.6%. Diluted ammonia pretreatment at higher temperature has reduced delignification, saccharification and fermentation efficiency with more phenols and furfurals.