We develop an integrated strategy for the production of ethanol from lignocellulosic biomass. Cellulose and hemicellulose fractions are first hydrolyzed into sugars using a mixture of γ-valerolactone (GVL), water, and toluene as a solvent containing dilute sulfuric acid as a catalyst, and the sugars are then co-fermented into ethanol over engineered yeast strains. Separation subsystems are designed to effectively recover GVL and toluene for reuse in biomass hydrolysis, and to recover lignin and humins for heat and power generation. We also develop an alternative process, in which we recover sugars and GVL from the residual biomass. To minimize utility requirements, we conduct heat integration, which allows us to meet all heating requirement using biomass residues. Finally, we perform a range of system-level analyses to identify the major cost and technological drivers. The proposed strategy is shown to be cost-competitive with other strategies.