Background: Fuel ethanol production from sustainable and largely abundant agro-residues such as sugarcane bagasse (SB) provides long term, geopolitical and strategic benefits. Pretreatment of SB is an inevitable process for improved saccharification of cell wall carbohydrates. Recently, ammonium hydroxide-based pretreatment technologies have gained significance as an effective and economical pretreatment strategy. We hypothesized that soaking in concentrated aqueous ammonia-mediated thermochemical pretreatment (SCAA) would overcome the native recalcitrance of SB by enhancing cellulase accessibility of the embedded holocellulosic microfibrils. Results: In this study, we designed an experiment considering response surface methodology (Taguchi method, L-8 orthogonal array) to optimize sugar recovery from ammonia pretreated sugarcane bagasse (SB) by using the method of soaking in concentrated aqueous ammonia (SCAA-SB). Three independent variables: ammonia concentration, temperature and time, were selected at two levels with center point. The ammonia pretreated bagasse (SCAA-SB) was enzymatically hydrolysed by commercial enzymes (Celluclast 1.5 L and Novozym 188) using 15 FPU/g dry biomass and 17.5 Units of beta-glucosidase/g dry biomass at 50 degrees C, 150 rpm for 96 h. A maximum of 28.43 g/l reducing sugars corresponding to 0.57 g sugars/g pretreated bagasse was obtained from the SCAA-SB derived using a 20\% v/v ammonia solution, at 70 degrees C for 24 h after enzymatic hydrolysis. Among the tested parameters, pretreatment time showed the maximum influence (p value, 0.053282) while ammonia concentration showed the least influence (p value, 0.612552) on sugar recovery. The changes in the ultra-structure and crystallinity of native SCAA-SB and enzymatically hydrolysed SB were observed by scanning electron microscopy (SEM), x-ray diffraction (XRD) and solid-state C-13 nuclear magnetic resonance (NMR) spectroscopy. The enzymatic hydrolysates and solid SCAA-SB were subjected to ethanol fermentation under separate hydrolysis and fermentation (SHF) and simultaneous saccharification and fermentation (SSF) by Scheffersomyces (Pichia) stipitis NRRL Y-7124 respectively. Higher ethanol production (10.31 g/l and yield, 0.387 g/g) was obtained through SSF than SHF (3.83 g/l and yield, 0.289 g/g). yConclusions: SCAA treatment showed marked lignin removal from SB thus improving the accessibility of cellulases towards holocellulose substrate as evidenced by efficient sugar release. The ultrastructure of SB after SCAA and enzymatic hydrolysis of holocellulose provided insights of the degradation process at the molecular level.