Transgenic bioenergy crops have shown the potential to produce vegetative oil by accumulating energy-rich triacylglyceride molecules that can be converted into biofuels (biodiesel and biojet). These transgenic crops cater to improved biofuel yield by providing lipids along with cellulosic sugars. Efficient bioprocessing technologies are needed to utilize these transgenic plants to their maximum potential. To this end, this study investigates a low- and high-severity chemical-free hydrothermal pretreatment of transgenic oilcane 1566 bagasse with in situ lipids to maximize the recovery of lipids for biodiesel and fermentable sugars for ethanol with minimal inhibitor generation. Hydrothermal pretreatment at 170°C recovered ∼25% of total lipids in the pretreatment liquor, leaving the remainder in bagasse residue for hexane recovery post fermentation. The recovery of lipids in pretreatment liquor remained constant beyond 170°C. Along with lipids, ∼35% w/w and ∼50% w/w fermentable sugars were recovered post saccharification from bagasse pretreated at 170°C and 210°C for 20 min, respectively. Hydrothermal pretreatment at 170°C for 20 min provided the optimum conditions for maximum recovery of lipids and cellulosic sugars that resulted in enhanced biofuel yield per unit biomass. High severity pretreatment increased the generation of inhibitors beyond the tolerance of fermentation microorganisms. In addition, the application of time-domain proton NMR spectroscopy was extended to bioprocessing. NMR technology facilitated the analysis of total lipids, the composition of fatty acids, and the characterization of free and bound lipids in untreated and pretreated oilcane 1566 bagasse subsequent to each step of biomass to biofuel conversion.