The utilization of lignocellulosic biomass as a petroleum alternative faces many challenges. This work reviews recent progress in the engineering of Escherichia coli and Klebsiella oxytoca to produce ethanol from biomass with minimal nutritional supplementation. A combination of directed engineering and metabolic evolution has resulted in microbial biocatalysts that produce up to 45 g L−1 ethanol in 48 h in a simple mineral salts medium, and convert various lignocellulosic materials to ethanol. Mutations contributing to ethanologenesis are discussed. The ethanologenic biocatalyst design approach was applied to other commodity chemicals, including optically pure d(−)- and l(+)-lactic acid, succinate and l-alanine with similar success. This review also describes recent progress in growth medium development, the reduction of hemicellulose hydrolysate toxicity and reduction of the demand for fungal cellulases.