As isobutanol exhibits higher energy density and lower hygroscopicity than ethanol, it is considered a better candidate biofuel. The sustainable supply of inedible biomass and lack of competition with the food supply have stimulated significant worldwide interest in the production of isobutanol from this resource. Both separate hydrolysis and fermentation (SHF) and simultaneous saccharification and fermentation (SSF) have been applied to isobutanol production to effectively utilize inedible biomass as a feedstock. However, both processes have various challenges, including low isobutanol yield and high production costs. This review summarizes the potential of isobutanol as a biofuel, methods for conferring isobutanol productivity, recent experimental studies, and developments in both SHF and SSF with the isobutanol-producing strains. Challenges to increasing the isobutanol yield and various suggestions for improvements to enable commercial production are also discussed.