Clostridium phytofermentans was isolated from forest soil and is distinguished by its capacity to directly ferment plant cell wall polysaccharides into ethanol as the primary product, suggesting that it possesses unusual catabolic pathways. The objective of the present study was to understand the molecular mechanisms of biomass conversion to ethanol in a single organism, Clostridium phytofermentans, by analyzing its complete genome and transcriptome during growth on plant carbohydrates. The saccharolytic versatility of C. phytofermentans is reflected in a diversity of genes encoding ATP-binding cassette sugar transporters and glycoside hydrolases, many of which may have been acquired through horizontal gene transfer. These genes are frequently organized as operons that may be controlled individually by the many transcriptional regulators identified in the genome. Preferential ethanol production may be due to high levels of expression of multiple ethanol dehydrogenases and additional pathways maximizing ethanol yield. The genome also encodes three different proteinaceous bacterial microcompartments with the capacity to compartmentalize pathways that divert fermentation intermediates to various products. These characteristics make C. phytofermentans an attractive resource for improving the efficiency and speed of biomass conversion to biofuels.