Several process parameters were studied to ascertain the effect on degradation of sugar cane bagasse in relation to the production of cellulase enzyme and reducing sugars by Solid Substrate Fermentation (SSF) and Submerged Culture Fermentation (SCF) of Aspergillus terreus SUK-1. The effect of air-flow rate (0-1.3 v/v/m), of different ratios of substrate weight to liquid volume (1:6, 1:10, 1:20, and 1:30 w/v, g/ml), scale-up effect (10, 20, and 100 times of 1:10 ration, w/v) and the effect of temperature (30, 40, 50, and $60^{circ}C$) in SSF were studied. Air-flow rate of 1.0 v/v/m gave the highest enzyme activity (FPase 0.25 IU/ml, CMCase 1.24 IU/ml) and reducing sugars concentration (0.72 mg/ml). Experiment using 1:10 ratio (w/v) was found to support maximum cellulase activity (FPase 0.58 IU/ml, CMCase 1.97 IU/ml) and reducing sugar concentration (1.23 mg/ml). Scaling-up the ratio of 1:10(w/v) by a factor of 20 gave the highest cellulase activity (FPase 0.71 IU/ml, CMCase 2.25 IU/ml) and reducing sugar concentration (3.67 mg/ml). The optimum temperature for cellulase activity and reducing sugar production was $50^{circ}C$(FPase 0.792 IU/ml, CMCase 2.25 IU/ml and 3.85 mg/ml for reducing sugar concentration). For SCF, the activity of cellulase enzyme and reducing sugar concentration was found to be lower than that obtained for SSF. The highest cellulase activity obtained in SCF was 50% lower than the highest cellulase activity in SSF, while for reducing sugar concentration, the highest concentration obtained in SCF was 90% lower than that obtained in SSF.