A novel brown rot fungus Phaeolus schweinitzii IUM 5048 was firstly used for ethanol production. It was found that this fungus produced ethanol with various sugars, such as glucose, mannose, galactose and cellobiose at 0.28, 0.22, 0.06, and 0.22 g of ethanol per g of sugar consumed, respectively. This fungus showed relatively good ethanol production from xylose at 0.23 g of ethanol per g of sugar consumed. However, the ethanol conversion rate of arabinose was relatively low (at 0.08 g of ethanol per g sugar). P. schweinitzii was capable of producing ethanol directly from rice straw and corn stalks at 0.11 g and 0.13 g of ethanol per g of substrates, respectively, when the fungus was cultured in a basal medium supplemented with 20 g/L rice straw or corn stalks. These results suggest that P. schweinitzii can hydrolyze cellulose or hemicellulose to fermentable sugars and convert them to ethanol simultaneously under oxygen limited condition.