Second-generation bioethanol made from lignocellulosic biomass is considered one of the most promising biofuels. However, the enzymatic hydrolysis of the cellulose component to liberate glucose for ethanol fermentation is one of the major barriers for the process to be economically competitive because of the recalcitrance of feedstock. In this chapter, the progress on the understanding of the mechanisms of lignocellulose degradation, as well as the identification and optimization of fungal cellulases, cellulolytic strains, and cellulase production is reviewed. The physiologic functions and enzymatic mechanisms of two groups of enzymes involved in lignocellulose degradation, cellulases and hemicellulases, are discussed, and the synergism of the cellulase components during lignocellulose degradation is addressed. Furthermore, the methods for screening filamentous fungal strains capable of degrading lignocellulose are evaluated and the production of cellulases by these fungal strains is discussed. Aside from traditional mutagenesis for improving the secretion level and enzymatic activities of cellulases from filamentous fungal species, genetic engineering of strains and protein engineering on cellulase molecules are also highlighted.