How the abundant tree biomass resources can be efficiently used for future biofuel production has attracted a great deal of interest and discussion in the past few years. Capable technologies are expected to be developed to realize the production of biofuel from wood biomass. A significant effort is put into the field of modifying wood properties of trees and simplifying the process of biomass-to-ethanol conversion, which includes mainly genetic engineering of lignin, cellulose and hemicellulose of woods. Current research in this field has achieved some promising results and opened up new opportunities to utilize wood biomass efficiently. This review will discuss the main developments in genetic modification of lignin, cellulose and hemicellulose biosynthesis in trees as well as other potential genetic technology of biofuel production from wood biomass.