“Second generation” bioethanol, with lignocellulose material as feedstock, is a promising alternative for first generation bioethanol. This paper provides an overview of the current status and reveals the bottlenecks that hamper its implementation. The current literature specifies a conversion of biomass to bioethanol of 30 to ∼50% only. Novel processes increase the conversion yield to about 92% of the theoretical yield. New combined processes reduce both the number of operational steps and the production of inhibitors. Recent advances in genetically engineered microorganisms are promising for higher alcohol tolerance and conversion efficiency. By combining advanced systems and by intensive additional research to eliminate current bottlenecks, second generation bioethanol could surpass the traditional first generation processes.