A system and method for fermenting substrates using a continuous processing system, including agricultural and industrial by-products such as dairy products, cellulosic-based products, and sugar-based products, into useful target products such as ethanol. One preferred system includes at least two reaction vessels and one or more membrane filters. The reaction vessels may each contain a mash with substrate and fermentation microorganisms useful in converting the substrate to the target product. The membrane filter(s) may be located downstream from reaction vessels and used to separate the mash into a retentate and a permeate. The microorganisms may be generally retained in the retentate and returned to their originating reaction vessel, while the permeate, not including the microorganisms, may be introduced to the next reaction vessel in series.

 
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