The demand for cellulases has increased tremendously over the last few decades. This is due to its numerous applications in industry and also because it can be used to hydrolyze cellulosic materials into sugars that can be fermented into bioethanol and bio‐based products. This does not only open up a big and significant market for cellulases, but also provides another source of biofuel and bioenergy in the future. Nevertheless, the cost of the existing substrates for cellulase fermentation is very high if required for large‐scale production. Sustainable supplies and an economically feasible biomass are needed to reduce the cost of cellulase production. Palm oil mill effluent (POME) is rich in carbohydrates, proteins, nitrogenous compounds, lipids, minerals, cellulose, hemicelluloses and lignin. It can be used naturally as a fermentation medium, either for cellulase or other value‐added product fermentation. In Malaysia, a large and continually increasing amount of POME is produced every year because of the high global demand for palm oil. Hence, the development of cellulase production from POME is reviewed, covering the POME production, cellulase production and the major challenges together with the future prospects of these processes.