Production of liquid biofuels, such as bioethanol, has been advocated as a sustainable option to tackle the problems associated with rising crude oil prices, global warming and diminishing petroleum reserves. Second-generation bioethanol is produced from lignocellulosic feedstock by its saccharification, followed by microbial fermentation and product recovery. Agricultural residues generated as wastes during or after processing of agricultural crops are one of such renewable and lignocellulose-rich biomass resources available in huge amounts for bioethanol production. These agricultural residues are converted to bioethanol in several steps which are described here. This review enlightens various steps involved in production of the second-generation bioethanol. Mechanisms and recent advances in pretreatment, cellulases production and second-generation ethanol production processes are described here.