Microbial production of isobutanol is made difficult by the chemical's high cell toxicity. Corynebacterium glutamicum, inherently one of the more isobutanol-tolerant industrial microorganisms, exhibits unprecedented productivity under oxygen deprivation, potentially allowing for high productivity of such toxic chemicals as isobutanol. Here, we show that development of C. glutamicum strains proficient in isobutanol production depends not only on modulating the activity of 2-keto acid decarboxylase (KDC) and isobutanol dehydrogenase (IBDH) and suppressing by-product formation, but also on optimizing the production process to eschew product inhibition. Isobutanol production under oxygen deprivation reached 343 mM (3.2% v/v) in strain IBU5 expressing kivd (encoding KDC) under the control of ldhA promoter and adhP (encoding IBDH from Escherichia coli MG1655) under the control of gapA promoter. This productivity is double the previously reported best productivity of 1.6% (v/v) and exceeds the 2.5% (v/v) limit beyond which cell growth becomes too severely suppressed. Irrespective, a cumulative 56.5% improvement on yield was possible with the combined effects of disruption of the ppc gene, encoding phosphoenolpyruvate carboxylase (PEPC), use of a NAD+-specific mutant acetohydroxyacid isomeroreductase (AHAIR), and overexpression of select glycolytic genes. Using oleyl alcohol to continuously extract the isobutanol from reaction mixture and tripling the cell concentration in the reaction mixture to 60 g dry cell/L stretched the yield to 78.1% and volumetric productivity to 981 mM (9.1% v/v). Biotechnol. Bioeng. 2013;110: 2938–2948. © 2013 Wiley Periodicals, Inc.