This study explored custard apple peel (Annona squamosa Linn.) as a novel raw material for sugar production through combined chemical and biological hydrolysis. Thermal-alkaline pretreatment was first optimized using one-factor-at-a-time (OFAT) experiments, followed by Box–Behnken Design (BBD) with Response Surface Methodology (RSM). The optimal conditions, NaOH concentration 2.5 g/L, temperature 90 °C, and treatment time 70 min, yielded 3440 mg/L reducing sugars, 1.8-fold high-er than single-factor optimization (1862 mg/L). The model showed a strong fit (R² = 0.9774, P < 0.05), confirming the reliability of the predicted values. In the biological approach, four cellulolytic bacterial strains, namely Alcaligenes sp. KHM19, Staphylococcus gallinarum VC10, Bacillus safensis HL04, and Bacillus velezensis KH-08, were assessed for their enzymatic potential. Among them, B. velezensis KH-08 displayed the highest FPase activity (19.56 U/L) and produced up to 365.97 mg/L reducing sugars after 6 days. Overall, the findings provide the first evidence for the valorization of custard ap-ple peel through integrated hydrolysis strategies and identify B. velezensis KH-08 as a promising novel strain for future biotechnological applications.