Surfactants play major role in the delignification of lignocellulosic biomass. Surfactant-assisted hydrothermal pretreatment was evaluated for chili post-harvest residue. Maximum reducing sugar yield of 0.445 g per g of dry biomass (g/g) was obtained when surfactant PEG 6000 was used. Compositional analysis revealed an efficient removal of lignin and hemicelluloses from the pretreated biomass. Fermentation inhibitors such as furfural, 5-hydroxymethylfurfural and organic acids were absent in the hydrolyzate. After pretreatment, the biomass can be directly hydrolyzed without any neutralization, washing and drying, and the hydrolyzate is devoid of major fermentation inhibitors. Fermentation with Saccharomyces cerevisiae yielded 1.84% of ethanol with a fermentation efficiency of 63.88%.