Bioethanol (ethanol produced from biomass) as a motor fuel is an attractive renewable fully sustainable energy sources as a means of lowering dependence on fossil fuels and air pollution towards greenhouse gasses, particularly CO2. Bioethanol, unlike gasoline, is an oxygenated fuel, which burns cleaner and thus lowers emissions of CO, NOx and unburned hydrocarbons pollutants, which are constituents in ground level ozone and particulate matter pollution (smog). In addition, bioethanol can replace currently used gasoline octane booster MTBE (methyl tertiary butyl ether), which causes serious environment and public health problems. Increasing demand of bioethanol for transportation sector and higher bioethanol prices than gasoline require utilization of cheap and unlimited raw materials in order to become bioethanol economically competitive with gasoline. Such alternative raw materials are residual lignocellulose (wastes) created from forest industries or from agricultural food crops (wheat straw, corn stover, rice straw). The lignocellulose contains lignin, which binds carbohydrate polymers (cellulose and hemicellulose) forming together a rather resistant structure. In this regards, a pre-treatment step is required in order to separate the lignin from polysaccharides. Once separated, the cellulose and hemicellulose fibres must be hydrolysed to monomeric sugars by enzymatic hydrolysis or dilute acid hydrolysis before being converted into ethanol. However, during the pretreatment and hydrolysis steps, various inhibitors towards microbial fermentation are generated along with the monomeric sugars. The inhibitors can be removed by various detoxification methods but the inclusion of this extra process step increases significantly the ethanol production cost. Compared with glucose, which can be readily fermented to ethanol by yeast strains such as Saccharomyces cerevisiae and bacterial strains of Zymomonas mobilis, xylose is more difficult to ferment because of a lack of industrially suitable microorganism able to rapidly and efficiently produce high concentrations of ethanol from xylose. In order to keep ethanol production cost at a minimum, the major sugars in lignocellulosic biomass (glucose and xylose) must be converted into ethanol due to high raw material cost, typically about 40% of the total ethanol production cost. The need for a microorganism able to utilize both glucose and xylose and to tolerate the inhibitory compounds present in lignocellulosic hydrolysates is therefore apparent. Several thermophilic anaerobic xylan degrading bacteria from our culture collection (EMB group at BioCentrum-DTU) have been screened for a potential ethanol producer from hemicellulose hydrolysates, and out of the screening test, one particular strain (A10) was selected for the best performance. The strain was morphologically and physiologically characterized as Thermoanaerobacter mathranii strain A10. Unlike other thermophilic anaerobic bacteria, the wild-type strain Thermoanaerobacter mathranii A10 was able to tolerate exogenously added ethanol of 5% (v/v) at 70oC in batch fermentation. To verify the potential of thermophilic anaerobe as an alternative ethanol producer from lignocellulose, ethanol tolerance and fermentation performance of lactate dehydrogenase deficient mutant strain Thermoanaerobacter BG1L1 was further studied. The experiments were carried out in a continuous immobilized reactor system (a fluidized bed reactor), which is likely to be the process design configuration for xylose fermentation in a Danish biorefinery concept for production of fuel ethanol. The immobilization of the fermenting organism inside the reactor and a long-term strain adaptation to high ethanol concentrations enhance significantly organism tolerance to ethanol (>8.3% v/v) and improve its fermentation capability when exposed at 5% (v/v) ethanol required in practice. The use of this reactor system enables high xylose conversion, effective glucose/xylose co-fermentation, and ethanol productivity of 1 g/l/h required for an economically viable bioethanol process. Furthermore, the fermentation of two undetoxified feed streams of industrial interest (acid hydrolyzed corn stover and wet-exploded wheat straw) was examined by the mutant strain. Despite the hydrolysates were not detoxified, the strain was capable of co-fermenting effectively the glucose and xylose giving ethanol yields in a range of 0.32 - 0.44 (g-ethanol / g-sugars). The high ethanol yields obtained and significant resistance to the toxicity of both hydrolysates indicate the great potential of the tested strain as a realistic candidate for industrial scale bioethanol production from lignocellulose. The study shows that the use of fluidized bed reactor technology might be a viable approach in a commercial lignocellulose-based bioethanol process using thermophilic anaerobic bacteria.