Malaysia is one of the major producers of palm oil and more than 1.3 million tones of Palm Kernel Cake (PKC) are produced as a byproduct annually. PKC is a medium grade protein animal feed and is often considered as suitable for ruminants. However, fibre composition in PKC make it unfavourable for poultry. It is possible to degrade the fiber components in PKC to digestible sugars by solid state fermentation (SSF)using Aspergillus flavus In SSF, solid substrate has to be sufficiently wet for microbes to be active. Also, good aeration is required for the microbes and to remove metabolic heat to maintain the optimum temperature. Some of the options available include Tray, Rotating Drum, Stirred Drum, Fluidized Bed type of fermenters. As SSF is a slow process and residence time requirement can be in days, Tray type fermenters with wet solid substrate in the form of a packed bed are commonly used. However, solid handling ability, heat and mass transfer characteristics in trays is very poor. To improve production capacity, heat and mass transfer, flow of air through deep packed beds is useful. In view of this, solid state fermentation in a vertical packed bed with a possibility of continuous addition of fresh raw material and withdrawl of product particles moving down by gravity is proposed. Pressure drop for aeration through the column can be high due to high fluid velocity and longer flow path. Changing the flow path laterally outward along the column length results in lower pressure drop due to diffuser effect, reduced fluid velocity and smaller flow path. Thus a Laterally Aerated Moving Bed (LAMB) bioreactor is developed for SSF of PKC using Aspergillus flavus. Result of this study showed that microbial process of SSF in LAMB bioreactor significantly degrades the PKC's fibre into reducing sugar.