Abstract For second-generation (2 G) cellulosic ethanol production to be sustainable and viable, there is the need to value-add to the stillage. Here, pilot plant-derived 2G ethanol sugarcane bagasse stillage (BS) and eucalyptus stillage (ES) was transformed into valuable products using hydrothermal liquefaction (HTL) at 300 °C and 20 bar with Pd/C and K2CO3. BS produced oil, phenolic monomers, and organic acid yields of 32 %, 49 % and 25 % respectively, while yields for ES were lower. Catechol constituted 43 % of the total phenolic content for BS. Recycling the aqueous phase (containing acetic, formic, lactic, and propionic acids) improved phenol, guaiacol and catechol yields. Oil stability tests indicated a significant drop in oil yield with aging, but there was no significant change in higher heating value. A preliminary techno-economic analysis suggests that the potential value of producing 2G ethanol and products (including fertilizer) from BS is three times that of depithed sugarcane bagasse. This study demonstrated a potential technology to convert 2 G cellulosic ethanol stillage to value-added chemicals, which not only improved the efficiency and profitability of 2G ethanol production but reduced organic contaminants synthesis.