The energy in cellulosic biomass largely resides in plant cell walls. Cellulosic biomass is more difficult than starch to break down into sugars because of the presence of lignin and the complex structure of cell walls. Transgenic down-regulation of major lignin genes led to reduced lignin content, increased dry matter degradability, and improved accessibility of cellulases for cellulose degradation. This review provides background information on lignin biosynthesis and focuses on genetic manipulation of lignin genes in important monocot species as well as the dicot potential biofuel crop alfalfa. Reduction of lignin in biofuel crops by genetic engineering is likely one of the most effective ways of reducing costs associated with pretreatment and hydrolysis of cellulosic feedstocks, although some potential fitness issues should also be addressed.