The production of ethanol from banana peels was optimized by response surface methodology in a two-step process. The steps were vinegar hydrolysis of banana peels using microwave heating, and fermentation of the peel hydrolysate by commercial baker’s yeast. The sugar (glucose) content in the hydrolysate was maximized over ranges of vinegar concentration, microwave power and hydrolysis time. The maximal 15.3 g/L glucose content was reached using 1.47 %w/w vinegar and 465 W microwave power for 10 min, and was used in maximizing the ethanol content from the second step. The maximal 9.2 %v/v ethanol was obtained with 4 %w/w yeast, an initial pH of 4.8, at 28°C for 192 hrs. The results suggest that a combination of microwave application and organic acid hydrolysis might contribute cost-efficiently in the production of ethanol from biological waste.