Much progress has been made in manipulation of lignin biosynthesis for improving paper-making wood and quality of forage grass in past decades. With the development of processing lignocellulosic biomass to biofuel, the lignin manipulation has attracted more research recently. This paper briefly summarizes the status of the application of biofuels and reviews the progress in lignin manipulation against the restriction of lignin in lignocellulosic biofuel production. It also addresses future trends in research and applications and future prospects in application of lignin manipulation in biofuel production.