In this work, steam explosion was used a pretreatment method to improve the conversion of elephant grass (Pennisetum purpureum) to cellulosic ethanol. This way, enzymatic hydrolysis of vaccum-drained and water-washed steam-treated substrates was carried out with Penicillium echinulatum enzymes while Saccharomyces cerevisiae CAT-1 was used for fermentation. After 48h of hydrolysis, the highest yield of reducing sugars was obtained from vaccum-drained steam-treated substrates that were produced after 10min at 200<SUP>o</SUP>C (863.42+/-62.52mg/g). However, the highest glucose yield was derived from water-washed steam-treated substrates that were produced after 10min at 190<SUP>o</SUP>C (248.34+/-6.27mg/g) and 200<SUP>o</SUP>C (246.00+/-9.60mg/g). Nevertheless, the highest ethanol production was obtained from water-washed steam-treated substrates that were produced after 6min at 200<SUP>o</SUP>C. These data revealed that water washing is a critical step for ethanol production from steam-treated elephant grass and that pretreatment generates a great deal of water soluble inhibitory compounds for hydrolysis and fermentation, which were partly characterized as part of this study.