A submerged membrane bioreactor (sMBR) was developed to ferment toxic lignocellulosic hydrolyzate to ethanol. The sMBR achieved high cell density of Saccharomyces cerevisiae during continuous cultivation of the hydrolyzate by completely retaining all yeast cells inside the sMBR. The performance of the sMBR was evaluated based on the ethanol yield and productivity at the dilution rates 0.2, 0.4, 0.6, and 0.8h(-1) with the increase of dilution rate. Results show that the yeast in the sMBR was able to ferment the wood hydrolyzate even at high dilution rates, attaining a maximum volumetric ethanol productivity of 7.94 ± 0.10 g L(-1)h(-1) at a dilution rate of 0.8h(-1). Ethanol yields were stable at 0.44 ± 0.02 g g(-1) during all the tested dilution rates, and the ethanol productivity increased from 2.16 ± 0.15 to 7.94 ± 0.10 g L(-1)h(-1). The developed sMBR systems running at high yeast density demonstrate a potential for a rapid and productive ethanol production from wood hydrolyzate.