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Abstract Background Environmental issues, such as the fossil energy crisis, have resulted in increased public attention to use bioethanol as an alternative renewable energy. For ethanol production, water and nutrient consumption has become increasingly important factors being considered by the bioethanol industry as reducing the consumption of these resources would decrease the overall cost of ethanol production. Biogas slurry contains not only large amounts of wastewater, but also the nutrients required for microbial growth, e.g., nitrogen, ammonia, phosphate, and potassium. Therefore, biogas slurry is an attractive potential resource for bioethanol production that could serve as an alternative to process water and nitrogen sources. Results In this study, we propose a method that replaces the process water and nitrogen sources needed for cellulosic ethanol production by Zymomonas mobilis with biogas slurry. To test the efficacy of these methods, corn straw degradation following pretreatment with diluted NaOH and enzymatic hydrolysis in the absence of fresh water was evaluated. Then, ethanol fermentation using the ethanologenic bacterial strain Z. mobilis ZMT2 was conducted without supplementing with additional nitrogen sources. After pretreatment with 1.34% NaOH (w/v) diluted in 100% biogas slurry and continuous enzymatic hydrolysis for 144 h, 29.19 g/L glucose and 12.76 g/L xylose were generated from 30 g dry corn straw. The maximum ethanol concentration acquired was 13.75 g/L, which was a yield of 72.63% ethanol from the hydrolysate medium. Nearly 94.87% of the ammonia nitrogen was depleted and no nitrate nitrogen remained after ethanol fermentation. The use of biogas slurry as an alternative to process water and nitrogen sources may decrease the cost of cellulosic ethanol production by 10.0–20.0%. By combining pretreatment with NaOH diluted in biogas slurry, enzymatic hydrolysis, and ethanol fermentation, 56.3 kg of ethanol was produced by Z. mobilis ZMT-2 through fermentation of 1000 kg of dried corn straw. Conclusions In this study, biogas slurry replaced process water and nitrogen sources during cellulosic ethanol production. The results suggest that biogas slurry is a potential alternative to water when pretreating corn straw and, thus, has important potential applications in cellulosic ethanol production from corn straw. This study not only provides a novel method for utilizing biogas slurry, but also demonstrates a means of reducing the overall cost of cellulosic ethanol.