Butanol is an important solvent and transport fuel additive, and can be produced by microbial fermentation. Attempts to generate a superior microbial producer of butanol have been made through different metabolic engineering strategies. However, to date, butanol bio-production is still not economically competitive compared to petrochemical-derived production because of its major drawbacks, such as, high cost of the feedstocks, low butanol concentration in the fermentation broth and the co-production of low-value by-products acetone and ethanol. Here we analyze the main bottlenecks in microbial butanol production and summarize relevant advances from recently reported studies. Further needs and directions for developing real industrially applicable strains in butanol production are also discussed.