Agro by-products are generated at a growing rate in Malaysia annually. Most of these by-products are consisted of fibrous materials, which are of limited use and are commonly being disposed or burnt. This practice is a waste of natural resources and is a potential source of pollution to the environment. Agro by-products can be used to produce enzymes by means of solid state fermentation, which is expected to be more efficient in both cost and yield with compared to the conventional methods. The feasibility of the application of residue of paddy crop in fungal solid state fermentation will be considered in this study. This study will investigate the conditioning effect of various hydrolyzing reagents on the residue of paddy crop in the production of hydrolytic enzymes. Residue of paddy crop will be conditioned by using one of the three reagents, namely sulphuric acid, sodium hydroxide or lime. The conditioned residue will be used as a substrate for solid state fermentation study at pre-set parameters for hydrolytic enzymes production. Growth and enzyme assays for cellulase or lignase production will be analysed and discussed.