Wheat-based thin stillage (W-TS) is liquid by-product of wheat ethanol production and contains valuable chemical intermediates such as 1,3-propanediol (1,3-PD), acetic acid, and glycerophosphorylcholine. Unfortunately, these compounds cannot be recovered/extracted easily due to the presence of high boiling point and hygroscopic solutes and unfermented particles from ethanol fermentation. Fermentation improvement study using endemic bacteria augmented with Lactobacillus panis PM1B discovered that glucose, incubation temperature, micronutrients, and pH adjustment affected two-stage fermentation (TSF). Importantly, fermentation could be scaled to a 210 L fermenter where 2% (w/v) 1,3-PD was produced. Unfermented particles should be removed prior to compound recovery. TSF was effective in producing solutions that were virtually free of colloids. Bacteria present in TSF system produced anoxic gas and exopolysaccharides and the combined action produced substantially clear solution. On the other hand, recovered particles, rich in lactobacilli, had a high protein content (50%, w/w, dry basis), which might be useful as an animal feed ingredient. Washing processes could lower moisture content and recover a high protein slurry (60% w/w, dry basis). Practical processes that incorporated fermentation using Lactobacilli could add substantial value to thin stillage and increase the value of products from ethanol production. These processes are scalable and readily implemented.