Bagasse is a sugarcane byproduct of high moisture content that usually requires drying before its use in the production of heat, power, fuels, and chemicals. This work explores the possibility of replacing flue gas, a hazardous heat source, with steam in bagasse rotary dryers using Aspen Plus v8.6 as a simulation tool. In the simulation, a bagasse-fed combined heat and power (CHP) plant generated superheated steam at 2 bar and flue gas, and both acted as drying agents in zero-dimensional biomass dryers that reduced bagasse moisture from 50 to 10 wt.%.The biomass final moisture content is inversely proportional to the drying agent temperature and flow rate. Steam dryers required a steam-to-wet-biomass ratio (S/WetBiom) of 4.0 with 2-bar steam at 260 °C to achieve a steam-to-evaporated-moisture (S/EvapMoist) ratio of 9.0, which is suggested for steam as a drying agent. For flue gas dryers, the equivalence ratio (ER) played an essential role: higher ERs increased the O2 content in flue gas, reducing the gas higher heating value (HHV), and increasing the amount of flue gas required per unit of evaporated moisture (FG/EvapMoist). Thus, ER values of 1.1 were advised to counterbal-ance the effects of ER and still provide enough excess air to allow complete fuel combustion in the CHP furnace. As the flue gas exiting the furnace presented extremely high temperatures (~1550 °C), this stream was cooled down to the superheated steam temperature (260 °C), and drying performances were compared. Although flue gas had an HHV lower than the steam latent heat, it presented higher production yields, resulting in lower bagasse combustion requirements in the CHP to provide enough drying agent per kg of dried biomass in flue gas dryers. Nevertheless, if the CHP system adopts steam split ratios in the range of 0–0.2 and alternative steam sources are available in the biorefinery, steam can be an attractive drying medium for biomass dryers.