Open burning of agricultural residues causes numerous complications including particulate matter pollution in the air, soil degradation, global warming and many more. Since they possess bio-conversion potential, agro-industrial residues including sugarcane bagasse (SCB), rice straw (RS), corncob (CC) and sweet sorghum bagasse (SSB) were chosen for the study. Yeast strains, Candida tropicalis, C. shehatae, Saccharomyces cerevisiae, and Kluyveromyces marxianus var. marxianus were compared for their production potential of bioethanol and phenylacetylcarbinol (PAC), an intermediate in the manufacture of crucial pharmaceuticals, namely, ephedrine, and pseudoephedrine. Among the substrates and yeasts evaluated, RS cultivated with C. tropicalis produced significantly (p ≤ 0.05) higher ethanol concentration at 15.3 g/L after 24 h cultivation. The product per substrate yield (Yeth/s) was 0.38 g/g with the volumetric productivity (Qp) of 0.64 g/L/h and fermentation efficiency of 73.6% based on a theoretical yield of 0.51 g ethanol/g glucose. C. tropicalis grown in RS medium produced 0.303 U/mL pyruvate decarboxylase (PDC), a key enzyme that catalyzes the production of PAC, with a specific activity of 0.400 U/mg protein after 24 h cultivation. This present study also compared the whole cells biomass of C. tropicalis with its partially purified PDC preparation for PAC biotransformation. The whole cells C. tropicalis PDC at 1.29 U/mL produced an overall concentration of 62.3 mM PAC, which was 68.4% higher when compared to partially purified enzyme preparation. The results suggest that the valorization of lignocellulosic residues into bioethanol and PAC will not only aid in mitigating the environmental challenge posed by their surroundings but also has the potential to improve the bioeconomy.