Due to energy and environmental concerns, biobutanol is gaining increasing attention as an alternative renewable fuel owing to its desirable fuel properties. Biobutanol production from lignocellulosic biomass through acetone-butanol-ethanol (ABE) fermentation has gained much interest globally due to its sustainable supply and non-competitiveness with food, but large-scale fermentative production suffers from low product titres and poor selectivity. This review presents recent developments in lignocellulosic butanol production, including pretreatment and hydrolysis of hemicellulose and cellulose during ABE fermentation. Challenges are discussed, including low concentrations of fermentation sugars, inhibitors, detoxification, and carbon catabolite repression. Some key process improvements are also summarised to guide further research and development towards more profitable and commercially viable butanol fermentation.