FILED PURSUANT TO RULE 424(B)(3)
                                                REGISTRATION FILE NO. 333-127714

                              PACIFIC ETHANOL, INC.

                  PROSPECTUS SUPPLEMENT NO. 1 DATED MAY 3, 2006
                    TO FINAL PROSPECTUS DATED APRIL 24, 2006

     The final prospectus of Pacific Ethanol, Inc. dated April 24, 2006 is
supplemented to include the following updated information:

Selling Security Holder Table
- -----------------------------

     The fourth and fifth paragraphs under the "Selling Security Holders"
section are amended and restated in their entirety to read as follows:

          "The following entities or persons are NASD-registered broker-dealers,
     or affiliates of NASD-registered broker-dealers, who initially acquired
     their shares of common stock offered for resale hereunder, or warrants, the
     underlying shares of common stock of which are offered for resale
     hereunder, from PEI California, or from placement agents who received them
     from PEI California, as compensation for transaction-based investment
     banking services relating to one or more private placement transactions of
     PEI California that occurred prior the consummation of the Share Exchange
     Transaction:

          o    Laird Q. Cagan, Registered Representative of Chadbourn
               Securities, Inc., an NASD-registered broker-dealer;
          o    Chadbourn Securities, Inc. is an NASD-registered broker-dealer;
          o    William P. Behrens and Stephan H. Kim are each officers of
               Northeast Securities, Inc., an NASD-registered broker-dealer; and
          o    UBS AG owns both UBS Securities LLC and UBS Financial Services
               Inc., both of whom are NASD-registered broker-dealers.

          The following entities or persons are affiliates of NASD-registered
     broker-dealers who initially acquired their shares of common stock offered
     for resale hereunder, or warrants, the underlying shares of common stock of
     which are offered for resale hereunder, in certain private placement
     transactions of PEI California that occurred prior the consummation of the
     Share Exchange Transaction, or from entities or persons who initially
     acquired them in certain private placement transactions of PEI California
     that occurred prior the consummation of the Share Exchange Transaction,
     each of whom may be deemed underwriters with respect to their respective
     shares of common stock offered for resale hereunder:

          o    Lorraine DiPaolo is President of Benchmark Capital Advisors, a
               subsidiary of Northeast Securities, Inc., an NASD-registered
               broker-dealer;
          o    W. Denman Zirkle is registered as an agent with First Dominion
               Capital Corp., an NASD-registered broker dealer;
          o    James George is a Senior Vice President, Institutional Bond Sales
               of Countrywide Securities, an NASD-registered broker dealer; and
          o    Hudson Bay Fund LP is affiliated with XTF Market Making LLC and
               XTF Capital LLC, both of whom are NASD-registered broker-dealers.
               Sander Gerber is Managing Member of XTF Market Making LLC and XTF
               Capital LLC and is also a Managing Member of Hudson Bay Capital
               Associates LLC, which is the general partner of Hudson Bay Fund
               LP."



     The "Selling Security Holder" table contained in the final prospectus dated
April 24, 2006 is updated as follows (1) to reflect a transfer of warrants to
purchase 51,000 shares of common stock of Pacific Ethanol, Inc. from Western
Milling, LLC to Hudson Bay Fund LP, (2) to reflect a transfer of warrants to
purchase 15,000 shares of common stock of Pacific Ethanol, Inc. from Craton
Capital, LP to Hudson Bay Fund LP, (3) to reflect a transfer of warrants to
purchase 1,400 shares of common stock of Pacific Ethanol, Inc. from Michael T.
Bock, Trustee of the Michael T. Bock Revocable Trust dated November 10, 2003 to
Berglioth Matthews, and (4) to reflect a transfer of warrants to purchase
198,740 shares of common stock of Pacific Ethanol, Inc. from Laird Q. Cagan to
UBS AG. Percentage of beneficial ownership is based on 31,441,931 shares of
common stock outstanding as of May 2, 2006.


                                                 Shares of                                     Shares of
                                               Common Stock                                  Common Stock
                                            Beneficially Owned                            Beneficially Owned
                                            Prior to Offering             Shares of         After Offering
               Name of                   -------------------------      Common Stock     ---------------------
           Beneficial Owner                Number      Percentage      Being Offered      Number    Percentage
- --------------------------------------   -----------  ------------    ---------------    --------   ----------
                                                                                          
Western Milling, LLC..................     20,000 (6)        *           20,000 (a)(6)         --        --
Craton Capital, LP....................         --           --               --                --        --
Michael T. Bock, Trustee of the
   Michael T. Bock Revocable Trust
   dated November 10, 2003............     18,933 (35)       *           18,933 (d)(35)        --        --
Laird Q. Cagan........................         --           --               --                --        --
Hudson Bay Fund LP....................    209,526 (51)       *           66,000 (t)(51)     143,526       *
Berglioth Matthews....................      1,400 (52)       *            1,400 (u)(52)        --        --
UBS AG................................    198,740 (53)       *          198,740 (v)(53)        --        --


- -------------------
*    Less than 1.0%.
(a)  The shares of common stock and the warrants exchanged by the selling
     security holder in connection with the Share Exchange Transaction for the
     shares of common stock offered hereunder, including shares of common stock
     that underlie warrants, were initially acquired from PEI California in a
     private placement transaction in March 2005 under which PEI California
     raised an aggregate of $21.0 million at $3.00 per share and issued 7.0
     million shares of common stock and warrants to purchase an aggregate of
     700,000 and 1.4 million shares of common stock at an exercise price of
     $5.00 and $3.00 per share, respectively. PEI California also issued
     placement agent warrants to acquire up to an aggregate of 678,000 shares of
     common stock at an exercise price of $3.00 per share. In aggregate,
     1,938,914 shares of common stock resulting from this private placement
     transaction are being offered hereunder for resale.
(d)  The shares of common stock and the warrants exchanged by the selling
     security holder in connection with the Share Exchange Transaction for the
     shares of common stock offered hereunder were initially acquired from PEI
     California in a private placement transaction in December 2004 under which
     PEI California raised an aggregate of approximately $300,000 at $3.00 per
     share and issued 103,666 shares of common stock and warrants to purchase an
     aggregate of 31,100 shares of common stock at an exercise price of $3.00
     per share. In aggregate, 74,541 shares of common stock resulting from this
     private placement transaction are being offered hereunder for resale.
(t)  Of the shares of common stock offered by the selling security holder
     hereunder 51,000 shares underlie warrants transferred to the holder by
     Western Milling, LLC and 15,000 shares underlie warrants transferred to the
     holder by Craton Capital, LP, all of which were initially acquired from PEI
     California in connection with the private placement offering described in
     footnote (a) above.
(u)  The shares of common stock offered by the selling security holder hereunder
     underlie warrants transferred to the holder by Michael T. Bock, Trustee of
     the Michael T. Bock Revocable Trust dated November 10, 2003 that were
     initially acquired from PEI California in connection with the private
     placement offering described in footnote (d) above.


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(v)  The shares of common stock offered by the selling security holder hereunder
     underlie warrants transferred to the holder by Laird Q. Cagan who acquired
     the warrants from Chadbourn Securities, Inc. and that were initially
     acquired from PEI California in connection with the private placement
     offering described in footnote (a) above. Chadbourn Securities, Inc. acted
     as a placement agent and initially received these warrants as compensation
     for services performed in connection with the private placement offering
     described in footnote (a) above. In connection with its March 2005
     offering, PEI California entered into an agreement with Chadbourn
     Securities, Inc. for placement agent services. Under this agreement, PEI
     California agreed to pay to Chadbourn Securities, Inc. 2% of gross proceeds
     plus a 1% non-accountable expense allowance as well as warrants exercisable
     at the offering price in an amount equal to 3% of the aggregate number of
     shares of common stock sold in the private offering. Under this agreement,
     PEI California paid to Chadbourn Securities, Inc. approximately $625,000
     and issued warrants to Chadbourn Securities, Inc. to purchase 212,700
     shares of common stock at $3.00 per share. In April 2004, PEI California
     entered into an agreement with Cagan-McAfee Capital Partners, LLC for
     advisory services. Under this agreement, PEI California agreed to pay to
     Cagan-McAfee Capital Partners, LLC 3% of any equity amount raised through
     the efforts of Cagan-McAfee Capital Partners, LLC. In connection with its
     March 2005 private placement, PEI California paid to Cagan-McAfee Capital
     Partners, LLC $235,000 and in connection with the Share Exchange
     Transaction, we paid approximately $85,000 to Cagan-McAfee Capital
     Partners, LLC. Differences between us, on the one hand, and Cagan-McAfee
     Capital Partners, LLC and Chadbourn Securities, Inc., on the other, arose
     as to what fees, if any, we would owe to Cagan-McAfee Capital Partners, LLC
     and/or Chadbourn Securities, Inc., under the advisory agreement in the
     event that our sale of Series A Cumulative Redeemable Convertible Preferred
     Stock to Cascade Investment, L.L.C., as described in one or more reports
     incorporated by reference into this prospectus., is completed. Under a
     Settlement Agreement and Release with Cagan-McAfee Capital Partners, LLC
     and Chadbourn Securities, Inc. dated November 1, 2005, we terminated the
     advisory agreement with Cagan-McAfee Capital Partners, LLC and made a
     payment of $150,000 in accelerated monthly consulting fees under the
     advisory agreement. In addition, in connection with the termination of the
     advisory agreement, we agreed that, in the event that our transaction with
     Cascade Investment, L.L.C. was completed, we would pay to Cagan-McAfee
     Capital Partners, LLC $960,000 within five business days of the closing. We
     paid this amount on April 13, 2006. Also, certain founders of PEI
     California agreed to sell an aggregate of 500,000 shares of common stock
     owned by them to Cagan-McAfee Capital Partners, LLC for a purchase price of
     $0.01 per share for securing financing to close the Share Exchange
     Transaction. Immediately prior to the consummation of the Share Exchange
     Transaction, these founders sold these shares to Cagan-McAfee Capital
     Partners, LLC at the agreed upon price. Prior to the aforementioned
     transactions, PEI California paid fees of $100,000 to Cagan-McAfee Capital
     Partners, LLC in connection with other private placement offerings and
     issued warrants to Cagan-McAfee Capital Partners, LLC to purchase 50,000
     shares of common stock at $2.00 per share.
(6)  Power to vote or dispose of the shares is held by Ejnar Knudsen as
     Executive Vice President of Western Milling LLC.
(35) Includes 8,600 shares underlying warrants.
(51) Includes 66,000 shares underlying warrants. Power to vote or dispose of the
     shares is shared by Yoav Roth, Principal and Portfolio Manager, and John
     Doscas, President, of Hudson Bay Fund LP. Messrs. Roth and Doscas disclaim
     beneficial ownership of the securities held by Hudson Bay Fund LP. The
     address for Messrs. Roth and Doscas is c/o Hudson Bay Fund LP, 120
     Broadway, 40th Floor, New York, New York, 10271.
(52) Represents shares underlying warrants.
(53) Represents shares underlying warrants. Power to vote or dispose of the
     shares is held by Shane Finemore as Managing Director of UBS AG. The
     address for Mr. Finemore is c/o UBS AG, 1285 6th Avenue, New York, New
     York, 10019.


                      (End of Prospectus Supplement No. 1.)


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