For cellulosic ethanol production, efficient hydrolysis of cellulose to easily fermentable sugars is important. Focus of this study is to maximize the yield of cellulose hydrolysis in subcritical and supercritical water at practically achievable reaction times. Microcrystalline cellulose is treated with subcritical and supercritical water in temperature range 302 - 405 °C, at 27.6 MPa, and residence times of 2.5 to 8.1 seconds. Cellulose-water slurry of 2.7 wt.% (after mixing with preheated water) is rapidly heated to the reaction temperature and the reaction product is rapidly cooled in a continuous reactor. Cellulose dissolves in water partially at 302 oC and completely at 330 °C. About 65% of cellulose converts to the oligomers and monomers at 335°C and 4.8 s, and also at 354 °C at 3.5 s. Upon increase in the reaction time or temperature to supercritical region, oligomers and monomers partially degrade to glycoaldehyde dimer, D-fructose, 1, 3 dihydroxyacetone dimer, anhydroglucose, 5-HMF and furfural. The effect of temperature, pressure, and reaction time on formation of various products is studied. In addition, the effect of base catalyst K2CO3 is examined. The catalyst increases cellulose gasification in the temperature range studied (302-333 oC).