Due to dwindling of fossil fuel, microbial production of bio-fuel from organic byproducts has acquired significance in recent years. Ethanol has been trusted as an alternate fuel for the future. Even though several microorganisms, including Clostridium sp., have been considered as ethanologenic microbes, the yeast Saccharomyces cerevisiae and facultative bacterium Zymomonas mobilis are better candidates for industrial alcohol production. Z. mobilis possesses advantages over S. cerevisiae with respect to ethanol productivity and tolerance, thus encouraging researchers for exploiting Z. mobilis ability to utilize sucrose, glucose, and fructose by Entner-Deudoroff pathway. The bottlenecks in Z. mobilis are: (i) its inability to convert complex carbohydrate polymers like cellulose, hemicellulose, and starch to ethanol, (ii) its resulting in byproducts such as sorbitol, acetoin, glycerol, and acetic acid, and (iii) formation of extracellular levan polymer. To circumvent these problems, genetic manipulation of Z. mobilis has been attempted for broadening the utilizable range of Z. mobilis, i.e. genes encoding several hydrolytic enzymes from related bacterial species have been cloned, and transferred into Z. mobilis. Interestingly, a pet operon (production of ethanol) was constructed by combining pdc (pyruvate decarboxylase) and odhII (alcohol dehydrogenase) genes of Z. mobilis, and transferred to other bacterial strains to make them ethanologenic novel strains. Through classical mutation and selection approaches, mutants of Z. mobilis with improved fermentation characteristics and without byproduct formation have been obtained. In addition to ethanol, Z. mobilis has also been metabolically engineered to produce L-alanine and L-lactic acid. Genes encoding β-carotene synthesis have also been cloned and successfully expressed in Z. mobilis to enrich the fermented nutrients of farm animals. Several applications of levan in food and pharmaceutical industries provide an opportunity to exploit Z. mobilis for large-scale production of levan. The merits of Z. mobilis suggest the potential use of this organism in industrial production of various fermentation products.