Bioethanol or biofuel as an alternative to fossil fuels has been expanded in the last few decades in the whole world. Use of bioethanol as a renewable transportation fuel will minimize the amounts of fossil-derived carbon dioxide (CO 2) to the Earth's atmosphere. Yeast is the most favorite organism for ethanol production because of its diverse substrate specificity and ease of production of ethanol under anaerobic condition. The main objective of this research work was to isolate & characterize stress tolerant, high potential ethanol producing yeast strains from agro industrial waste. In total 4 yeast isolates have been characterized on the basis of morphological and physico-chemical characters. Based on morphological appearance of vegetative cell under microscope, ascospore production, colony character and physicochemical characters all the strains was identified to be Yeast. Phylogenetic identification by DNA sequencing confirmed that the strain P is Saccharomyces Unisporus, strain C is Saccharomyces cerevisiae, strain T is Saccharomyces cerevisiae & strain DB2 is Candida piceae. Most of the strains were thermotolerant, pH tolerant, ethanol tolerant as well as osmotolerant. They were resistant to cycloheximide at 0.0015g/100ml concentration, hydrogen peroxide (0.50%), Chloramphenicol (30µg/disc) but growth was inhibited in the presence of 1% acetic Acid. The strains P, C & T showed good Invertase activity & only the T strain was capable of producing killer toxin. They were capable of fermenting glucose, fructose, sucrose, amylose & trehalose. Ethanol producing capability of the strains was studied using sugarcane molasses as substrate. The bioethanol production capacity of the yeasts were found to be 15%, 14.5%, 12% & 8.15% for P, C, T & DB2 respectively at pH 6.0, 30 o C temperature in media with 5.5% initial reducing sugar concentration in shaking condition. Pilot scale ethanol production by P strain was 13.10%, C strain 11.15%, T strain 9.80% & DB2 strains 7.85% at 60 hours. These strains could be potential for ethanol production from cane molasses.