Lignocellulosic biofuels represent a sustainable, renewable, and the only foreseeable alternative energy source to transportation fossil fuels. However, the recalcitrant nature of lignocellulose poses technical hurdles to an economically viable biorefinery. Low enzymatic hydrolysis efficiency and low productivity, yield, and titer of biofuels are among the top cost contributors. Protein engineering has been used to improve the performance of lignocellulose-degrading enzymes, as well as proteins involved in biofuel synthesis pathways. Unlike its great success seen in other industrial applications, protein engineering has achieved only modest results in improving the lignocellulose-to-biofuels efficiency. This review will discuss the unique challenges that protein engineering faces in the process of converting lignocellulose to biofuels and how they are addressed by recent advances in this field.