An overview of aqueous processing of soybean will be presented,and several challenges and solutions are discussed.The use of the aqueous “skim” phase and the fibrous faction in ethanol fermentation can alleviate the waste water or skim concentration problem and the proteins and peptides in the skim fraction as well in the solid fiber stream can be an excellent nutrient source for yeast to increase ethanol fermentation rate and enhance the value of the fermentation residue,i.e.,increasing protein content thus its value as non-ruminant feed.Solid state fermentation can be another option to enhance nutritional properties of the soy fiber co-product.A non-protease emulsion breaking technology is also discussed.