Results from an investigation of the mechanical size reduction with the Szego Mill™ as a pretreatment method for lignocellulosic biomass are presented. Pretreatment is a highly expensive and energy-consuming step in lignocellulosic biomass processing. Therefore, it is vital to study and optimize different pretreatment methods to find a most efficient production process. The biomass was milled with the Szego Mill™ using three different approaches: dry milling, wet milling and for the first time nitrogen assisted wet milling was tested. Bioethanol and biogas production were studied, but also fibre analysis and SEM (scanning electron microscope) analysis were carried out to characterize the effect of different milling approaches. In addition, two different process flows were used to evaluate the efficiency of downstream processing steps. The results show that pretreatment of barely straw with the Szego Mill™ enabled obtaining glucose concentrations of up to 7 g L−1 in the hydrolysis mixture, which yields at hydrolysis efficiency of 18%. The final ethanol concentrations from 3.4 to 6.7 g L−1 were obtained. The lowest glucose and ethanol concentrations were measured when the biomass was dry milled, the highest when nitrogen assisted wet milling was used. Milling also resulted in an 6−11% of increase in methane production rate during anaerobic digestion of straw.