Ethanol produced from first generation (1G) feedstock such as sugarcane juice or corn grain is the major source of transportation biofuel in Brazil, USA and some other countries. Production of ethanol from second generation (2G) feedstock (grasses, fibrous agro residues or energy crops) or third generation (3G) feedstock (algae) can significantly reduce the dependency on 1G ethanol eventually reducing the petroleum use and minimizing the greenhouse gas emissions effectively. Nevertheless, the technological bottlenecks in the processing of biomass to biofuels conversion play a pivotal role for the commercial success of 2G or 3G biofuels. Computer based simulation studies have provided the valuable information on biorefinery configurations evaluating the advantages and disadvantages of processing steps and the cost of ethanol (minimum ethanol selling price). Furthermore, computational simulation also shows the important insights on environmental parameters through assessment of sustainability indicators (economical, environmental, and social). Nanotechnology mediated advances may provide the unique breakthroughs for the cost effective and ecofriendly biofuels production in near future. Nanotechnology is the basic discipline of building machines or devices on the scale of molecules (10-9 m) much smaller than a cell. In past few years, nano-technological based innovations have shown great applications in medical sector, polymer science and other applied industrial disciplines. Nanotechnology could also have a remarkable role in the improvement of processing routes of biofuels production. This paper discusses the possible role of nanotechnology and computational simulation tools in advancement of cellulosic ethanol as biofuel in biorefineries.