Grass silage is a promising biorefinery feedstock with surplus production potential, providing a source of readily soluble protein and lignocellulosic fibre. This study presents a concept combining protein extraction with production of single cell protein from enzymatically saccharified grass silage fibre by fermentation of the filamentous fungus Paecilomyces variotii. Steam explosion and ammonia soaking were compared as pretreatments, leading to 81.2% and 88.1% carbohydrate hydrolysability, respectively. Microbial biomass yields of 51% from hydrolysate sugars were reached with a protein content of 51% of cell dry weight. A single-reactor ammonia pretreatment and hydrolysis process was demonstrated, including ammonia recovery of up to 66%, while the residual ammonia was synergistically utilized as a nitrogen source for protein production. The effect of cellulase dosage, hydrolysis time and solids concentration was empirically modelled and the model was applied for cost optimization of enzymatic hydrolysis as a part of a techno-economic assessment of the process.