Systems and methods are provided for separating high value by-products, such as oil and/or germ, from grains used for alcohol production. In one embodiment, a method for separating by-products from grains used for alcohol production includes, subjecting milled grains to liquefaction to provide a liquefied starch solution including fiber, protein, and germ. The germ is separated from the liquefied starch solution. The separated germ is ground, e.g., to a particle size less than 50 microns, to release oil to provide a germ/oil mixture. Then, prior to fermentation, the oil is separated from the germ/oil mixture to yield an oil by-product. The pH of the germ/oil mixture can be adjusted to about 8 to about 10.5 and/or cell wall breaking enzymes or chemicals may be added to help release oil from the germ. In one example, the oil yield is greater than 1.0 lb/Bu.
