Rice straw was successfully pretreated with a novel and inexpensive morpholinium ionic liquid, 1-H-3-methylmorpholinium chloride ([HMMorph][Cl]). The influence of water (30, 40, 50% w/w) and dimethyl sulfoxide (DMSO) (10, 30% w/w), as co-solvents, pretreatment time (2, 3, 5 h), temperature (90, 105, 120 °C), solid loading (5, 6.7, 10% w/w), and straw particle size (<0.177, 0.177–0.841 mm, and 0.841–2 mm) were investigated for maximum ethanol production. The best results were obtained in 50% water, at 120 °C and 5% (w/w) solid loading for 5 h from 0.177 – 0.841 mm straw particles. The hydrolysis yield was increased from 33.2% to 70.1%, while ethanol production yield was improved from 21.9% to 64% of the theoretical maximum. The performance of the IL was comparable to 1-ethyl-3-methylimidazolium acetate. Simple synthesis process and dilute solution required for the pretreatment with [HMMorph][Cl] offers cost reductions in the use of ILs in biofuel production.