canada is known for its abundant forests and thriving forest products industry. for every ton of paper produced in mills across the country, approximately 30 kg of dry primary sludge is produced. the dry sludge is then either shipped to landfills or incinerated along with dried secondary sludge. however, this waste stream has the potential to be used more efficiently for the production of higher value products. primary sludge is cellulosic in nature and contain fractions of hemicellulose, lignin and ash. cellulose in the primary sludge is more accessible to enzymatic hydrolysis as compared to natural lignocellulosic biomass due to the physico-chemical treatment, that wood undergoes during pulping process. this stream was used to produce fermentable reducing sugars using enzymatic hydrolysis. supplementation of β-glucosidase enzyme (1:0.5) reduced the time required for 35% conversion to 24 hours instead of 96 hours. the hydrolysate obtained for four days contained 41 g/l of glucose based on 81 % conversion of the cellulosic fraction in the primary sludge with β-glucosidase supplementation to a level of 1:2. the obtained hydrolysate was fermented to produce microbial lipids using oleaginous yeasts strains (cryptococcus curvatus). the fatty acid compositions of microbial lipids produced were found to similar to vegetable oil. it thus can be used as a feedstock for the production biodiesel and other value-added products which in turn can add to the revenue of the industry.