Abstract: Coco peat was used as biomass to produce reducing sugar with worm tea, rich with diverse microbial content, to assist sugar hydrolysis biologically. The aim is to determine the morphology of bacteria and ability to breakdown cellulose. Comparison of water and dilute acid pretreatment to produce reducing sugar from coconut peat at different pH was also studied. The bacteria were found to be Bacillus pumilis, Bacillus subtilis, Micrococcus spp, Staphylococcus aureus and Aspergillus fumigatus. All of them were investigated for starch hydrolysis test and cellulase clearance zone for breakdown of amylase and cellulase. Sugar yield was recorded the highest for acid pre-treatment and worm tea hydrolysis at 7.94 Brix%, pH 9. These results indicated that compost tea has great potential in bioethanol production.