The anaerobic digestion of solids yeilding biogas was investigated with emphasis on the hydrolysis of solid-substrate yeilding small molecules soluble in water. The intermediate substrate may be used to produce biogas later when it is needed or transformed further into other chemicals. This is a better alternative than utilization of biogas at the production site directly from solid-substrate. Potato peel from potato chip factory was chosen as a raw material. The objectives of this research are to investigate the hydrolysis rate and the production of biogas. In the experiments, the total solid in the system was varied between 3 – 12 %. It was found that the highest total solid reduction was 85 % at the initial total solid of 5%. The accumulation of biogas was obtained at 1.38 1/1 working volume of reeactor/day. A study on water circulation at the rate of 1.47, 2.94 and 4.41 1/1 working volume of reeactor/day showed that circulation rate has no effect on hydrolysis of solid-substrate and biogas production. A comparision of bacterial seed in the system of 20,000 40,000 and 60,000 mg/l indicated a slight increase of the hydrolysis rate with the seed concentration.