The soft-rot bacteria Erwinia carotovora SR38 and Erwinia chrysanthemi EC16 have been genetically engineered to efficiently produce ethanol and carbon dioxide as primary fermentation products from cellobiose, glucose and xylose. These organisms have the native ability to secrete a battery of hydrolases and lyases to aid in the solubilization of lignocellulose. Both strains of ethanologenic Erwinia fermented cellobiose at twice the rate of the cellobiose-utilizing yeasts (Spindler et al., 1992. Biotechnology Letters 14: 403-407) and may be useful in simultaneous saccharification and fermentation processes.