Clostridium thermocellum is a thermophilic, obligately anaerobic, gram-positive bacterium that is a candidate microorganism for converting cellulosic biomass into ethanol through consolidated bioprocessing. Ethanol intolerance is an important metric in terms of process economics, and tolerance has often been described as a complex and likely multigenic trait for which complex gene interactions come into play. Here, we resequence the genome of an ethanol-tolerant mutant, show that the tolerant phenotype is primarily due to a mutated bifunctional acetaldehyde-CoA/alcohol dehydrogenase gene (adhE), hypothesize based on structural analysis that cofactor specificity may be affected, and confirm this hypothesis using enzyme assays. Biochemical assays confirm a complete loss of NADH-dependent activity with concomitant acquisition of NADPH-dependent activity, which likely affects electron flow in the mutant. The simplicity of the genetic basis for the ethanol-tolerant phenotype observed here informs rational engineering of mutant microbial strains for cellulosic ethanol production.