We propose a new process using a vapor phase bioreactor (VPB) to simultaneously (i) delignify sugar-cane bagasse, a residue of sugar production that can be recycled in paper industry, and (ii) produce laccase, an enzyme usable to bleach paper pulp. Ethanol vapor, used as laccase inducer, was blown up through a VPB packed with bagasse and inoculated with Pycnoporus cinnabarinusss3, a laccase-hyperproducing fungal strain. After 28 days, the laccase activity in the ethanol-treated bagasse was 80-fold higher (80 U g(ds)(-)(1)) and the bagasse delignification percentage was 12-fold (12%) higher than in the reference samples produced in the absence of ethanol, corresponding to a high overall pulp yield of 96.1%. In the presence of ethanol, the total soluble phenols amount was 2.5-fold (3 mg FA g(ds)(-)(1)) higher than that without ethanol. Six monomeric phenols were detected: p-coumaric (4-hydroxyphenyl-2-propenoic), ferulic (4-hydroxy-3-methoxyphenyl-2-propenoic), syringic (4-hydroxy-3,5-dimethoxybenzoic), vanillic (4-hydroxy-3-methoxybenzoic) and 4-hydroxybenzoic acids, and 2-methoxyhydroquinone. Higher concentrations of phenolic compounds were observed when ethanol vapor was added, confirming a more efficient bagasse delignification. After 28 days, the fungal-treated bagasse (with ethanol addition) was pulped and refined. For a freeness of 81 mL CSF, this processing required 50% less energy than with untreated bagasse (without inoculation and ethanol addition), which indicated a significant potential economy for the pulp and paper industry. Handsheets were made from pulp obtained after fungal-treated and untreated bagasse. Comparison of bagasse-pulp characteristics for freeness of 35 and 181 mL CSF showed an average increment by 35% for tensile index and breaking strength and length. VPB allowed a simultaneous production of laccase (90 U g(ds)(-)(1), after pressing of the bagasse) that improved the overall profitability of the process.