Rice straw is a promising feedstock for sustained production of ethanol and value-added products. In this study, production of ethanol with xylitol from rice straw was improved by employing moderate aqueous ammonia pretreatment and sequential fermentation. The pretreatment removed significant amount of lignin and enhanced the enzymatic digestibility of rice straw by four fold. The analysis of the pretreated rice straw by SEM, XRD and FTIR showed significant changes in physicochemical structure, favoring enzymatic hydrolysis. The fermentability of the sugar hydrolyzate to ethanol was evaluated in repeated batch fermentation with cell recycling. Ethanol yield of 98% was achieved up to three batches of recycling of cells of Candida tropicalis. Fermentation of glucose and xylose in the hydrolyzate to ethanol and xylitol was studied using C. tropicalis in single and two-stage sequential fermentations. While ethanol yield was same, xylitol yield was higher in the two-stage fermentation than single batch fermentation. The results suggest that the sequential fermentation of sugar hydrolyzate of ammonia pretreated rice straw would be a promising process for production of ethanol and xylitol. © 2015 Elsevier B.V.