Sheer enormity of lignocellulosics makes them potential feedstock for biofuel production but, their conversion into fermentable sugars is a major hurdle. They have to be pretreated physically, chemically, or biologically to be used by fermenting organisms for production of ethanol. Each lignocellulosic substrate is a complex mix of cellulose, hemicellulose and lignin, bound in a matrix. While cellulose and hemicellulose yield fermentable sugars, lignin is the most recalcitrant polymer, consisting of phenyl-propanoid units. Many microorganisms in nature are able to attack and degrade lignin, thus making access to cellulose easy. Such organisms are abundantly found in forest leaf litter/composts and especially include the wood rotting fungi, actinomycetes and bacteria. These microorganisms possess enzyme systems to attack, depolymerize and degrade the polymers in lignocellulosic substrates. Current pretreatment research is targeted towards developing processes which are mild, economical and environment friendly facilitating subsequent saccharification of cellulose and its fermentation to ethanol. Besides being the critical step, pretreatment is also cost intensive. Biological treatments with white rot fungi and Streptomyces have been studied for delignification of pulp, increasing digestibility of lignocellulosics for animal feed and for bioremediation of paper mill effluents. Such lignocellulolytic organisms can prove extremely useful in production of bioethanol when used for removal of lignin from lignocellulosic substrate and also for cellulase production. Our studies on treatment of hardwood and softwood residues with Streptomyces griseus isolated from leaf litter showed that it enhanced the mild alkaline solubilisation of lignins and also produced high levels of the cellulase complex when growing on wood substrates. Lignin loss (Klason lignin) observed was 10.5 and 23.5% in case of soft wood and hard wood, respectively. Thus, biological pretreatment process for lignocellulosic substrate using lignolytic organisms such as actinomycetes and white rot fungi can be developed for facilitating efficient enzymatic digestibility of cellulose.