A novel ultrasound-assisted alkali pretreatment strategy was developed which could effectively remove lignin and hemicelluloses and improve the sugar yield from chili post harvest residue. Operational parameters that affect the pretreatment efficiency were studied and optimized. Inhibitor analysis of the hydrolyzate revealed that major fermentation inhibitors like furfural, 5-hydroxymethyl furfural as well as organic acids like citric acid, succinic acid and propionic acid were absent. Hence fermentation can be carried out without detoxification of the hydrolyzate. Changes in structural properties of the biomass were studied in relation to the pretreatment process using Scanning Electron Microscopy (SEM) and the changes in chemical composition were also monitored. The biomass pretreated with the optimized novel method could yield 0.428 g/g of reducing sugars upon enzymatic hydrolysis. The hydrolyzate obtained by this novel pretreatment strategy was found to be suitable for bioethanol and xylanase production.