Alkaline hydrolysis was proposed as a new innovative method for treating, recycling and valorizing cellulosic wastes. Cellulose degradation was studied with the aim of producing hydroxy carboxylic acids to recycle otherwise unusable cellulosic waste materials. Hydroxy acids are attractive as they are more hydrophilic than common aliphatic acids. Microcrystalline cellulose was subjected to alkaline degradation under high-temperature conditions. Reaction mixture composition was monitored with HPLC-DAD and further characterized with LC-MS-TOF. Effects of NaOH concentration, temperature, and reaction time were studied to understand their importance to the overall yield and promoting formation of glucoisosaccharinic acid (GISA). The most effective conditions producing 65% hydroxy acids yield were found to be in high temperature of 200 degrees C or elongated reaction time at 160 degrees C with 10 w-% NaOH. Subsequently, the method was applied to tissue paper and various industrial waste and residue samples yielding up to 55% hydroxy acid yield, GISA remaining as the main product in all experiments. Thus, both purely cellulosic, and cellulose containing materials can be successfully converted into hydroxy acids. In pulping degradation of cellulose during alkali treatment is a known phenomenon, but purposeful degradation to recycle low-grade cellulosic material has not been studied so far. Alkali digestion is suggested as a novel and simple method to valorize low-grade cellulosic wastes, such as primary and fiber sludges from paper mills and sawdust, as organic acids of notable hydrophilic nature.