Abstract: Palm shell is one of broad renewable sources, which could be converted to ethanol by pretreatment, saccharification and fermentation. Palm shell was pretreated in diluted acid hydrolysis reactor under such conditions: 200℃, 4.0 MPa, 500 r/min for 5 min, which made those contents of hemicelluloses and celluloses in palm shell change from 21.74%, 45.42% to 2.35%, 47.63%, respectively. Effects of palm shell saccharification by three factors (L/S ratio, temperature and cellulase added amount) were researched, which indicated that 16:1 of L/S ratio and low temperature 37℃ were more propitious to saccharification. Cellulase-adding amount did not positively proportionate with transformation rate of raw material. Effect of saccharification was decided by pretreatment and tolerance of β-glucosidase to glucose. Palm shell saccharification liquid was fermented by Saccharomyces cerevisiae, and ethanol transformation rate got to 87.5%. According SEM, it was discovered that microcosmic structure of pretreated and saccharificated palm shell was much looser than that of raw palm shell, and long linear structure of raw palm shell was broken, but the basic frame did not have apparent change because of lignin existence.