A recently discovered thermophilic isolate, Geobacillus sp. R7, was shown to produce a thermostable cellulase with a high hydrolytic potential when grown on extrusion-pretreated agricultural residues such corn stover and prairie cord grass. At 70°C and 15-20% solids, the thermostable cellulase was able to partially liquefy solid biomass only after 36 h of hydrolysis time. The hydrolytic capabilities of Geobacillus sp. R7 cellulase were comparable to those of a commercial cellulase. Fermentation of the enzymatic hydrolyzates with Saccharomyces cerevisiae ATCC 24860 produced ethanol yields of 0.45-0.50 g ethanol/g glucose with more than 99% glucose utilization. It was further demonstrated that Geobacillus sp. R7 can ferment the lignocellulosic substrates to ethanol in a single step that could facilitate the development of a consolidated bioprocessing as an alternative approach for bioethanol production with outstanding potential for cost reductions.