Influences of both ultrastructural modification of cellulose after hydrothermal pretreatment and products derived from lignin‐carbohydrate complex (LCC) on the subsequent enzymatic digestibility and fermentation were studied in this study. Under hydrothermal conditions, it was found that the rearrangement of hydrogen bonding pattern in cellulose via allomorph and conformational changes which was mainly severity‐dependent increased the numbers of water‐exposed glycosidic bond and the formation of “amorphous‐like” cellulose fibril facilitated enzymatic hydrolysis. Pseudo lignin, soluble xylo‐oligomers, phenols and degradation products from high severity impeded enzymatic digestion. LCC and phenols which were rich in pH‐controlled prehydrolyzate did not sufficiently inhibit yeast while furans and some aromatics which were rich in high‐severity prehydrolyzate might be potential inhibitors. Trade‐off phenomenon was solved by pH‐controlled operation and high yields in both glucose (83–93%) and xylose (75–80%) were simultaneously obtained. The final ethanol yield from cellulose to ethanol reached as high as 84–93%. © 2018 American Institute of Chemical Engineers AIChE J, 64: 1954–1964, 2018