This work was carried out to determine the optimum conditions for preparing activated carbons from sawdust and palm kernel shells (PKS); the maximum initial water concentration in feed solution to produce anhydrous ethanol using the adsorbents; and the effects of initial water concentration on water removal efficiency, selectivity, and adsorption capacity. The sawdust was chemically activated with ammonium chloride as catalyst while the PKS was carbonized and steam activated. Different particle sizes of the activated carbons were used in the study. The optimum conditions for preparing the activated carbons were established. It was found that only the activated sawdust particle sizes could break the ethanol-water azeotropic composition in feed solutions containing 5-9% (v/v) water to produce anhydrous ethanol. Powdered activated sawdust particles had the highest adsorption capacity compared to all the other particle sizes. The water removal efficiency, selectivity of water-to-ethanol adsorption, and adsorption capacity were higher at low initial water concentrations.