Plant cell walls are the most abundant biomass source in nature and are of increasing importance because worldwide attention has now focused on bioethanol production to combat global warming and to safeguard global energy. Because of competition between food and fuel production, lignocelluloses are expected to be utilized for future fuel ethanol production. One of the major problems in producing ethanol from lignocellulosic biomass is the expensive production cost. Consolidated bioprocessing (CBP) is gaining recognition as a potential breakthrough for low-cost biomass processing (Lynd, 1996; Lynd et al., 2002; Lynd et al., 2005; Van Zyl et al., 2007; Xu et al. 2009). CBP of lignocellulose to bioethanol refers to the combination of the 4 biological events required for this conversion process (production of lignocellulose-degrading enzymes, hydrolysis of polysaccharides present in pre-treated biomass and fermentation of hexose and pentose sugars) in one reactor. However, no natural microorganism exhibits all the features desired for CBP. Bacteria and yeast have been the primary candidates for CBP research and some progress has been made in this regard. Traditionally, proponents of CBP processes have identified two primary developmental pathways capable of producing industrially viable CBP microbial strains. These are category I, engineering a cellulase producer, such as Clostridium thermocellum, to be ethanologenic; and category II, engineering an ethanologen, such as Saccharomyces cerevisiae or Zymomonas mobilis, to be cellulolytic (Lynd, 1996; Lynd et al., 2002; Lynd et al., 2005; Van Zyl et al., 2007; Xu et al., 2009). However, the both categories have advantages and disadvantages. Cellulase producer lacks ethanol tolerance, and it is very difficult to coexpress of multiple saccharification enzyme genes in ethanol producer. Especially, heterologous expression of Trichoderma reesei cellobiohydrolases (cellobiohydrolase I and cellobiohydrolase II), which play the crucial role in cellulose degradation, are generally poor. Basidiomycetes, also known as wood-rotting fungi, can achieve the complete breakdown of lignins (Cooke & Rayner, 1984; Cullen, 1997), and are considered primary agents of plant litter decomposition in terrestrial ecosystems (Thorn et al., 1996). Furthermore, some basidiomycetes produce alcohol dehydrogenases, thus allowing the production of wine using a mushroom (Okamura et al., 2000; Okamura et al., 2001). These properties of basidiomycetes appear suitable for use in CBP. In a preliminary study, we screened some edible mushrooms for their ability to produce ethanol and found that Flammulina velutipes is a good producer of ethanol. F. velutipes is a white-rot fungus that grows from spring through