The ethanol yield and productivity obtained during fermentation of lignocellulosic hydrolysates is decreased due to the presence of inhibiting compounds, such as weak acids, furans and phenolic compounds formed or released during hydrolysis. This review describes the effect of various detoxification methods on the fermentability and chemical composition of the hydrolysates. Inhibition of fermentation can be relieved upon treatment with the ligninolytic enzyme laccase, pre-fermentation by the filamentous fungus Trichoderma reesei, removal of non-volatile compounds, extraction with ether or ethyl acetate, and treatment with alkali or sulfite. Various fermentation strategies can also be used to improve yield and productivity in lignocellulosic hydrolysates. Batch, fed-batch, and continuous fermentation are discussed in relation to inhibition of fermentation in lignocellulosic hydrolysates.