Consolidated bioprocessing (CBP) is a system in which cellulase production, substrate hydrolysis, and fermentation are accomplished in a single process step by cellulolytic microorganisms. CBP offers the potential for lower biofuel production costs due to simpler feedstock processing, lower energy inputs, and higher conversion efficiencies than separate hydrolysis and fermentation processes, and is an economically attractive near-term goal for "third generation" biofuel production. In this review article, production of third generation biofuels from cellulosic feedstocks will be addressed in respect to the metabolism of cellulolytic bacteria and the development of strategies to increase biofuel yields through metabolic engineering.