Clostridium thermocellum is a model microorganism for converting cellulosic biomass into fuels and chemicals via consolidated bioprocessing. One of the challenges for industrial application of this organism is its low ethanol tolerance, typically 1-2% (w/v) in wild-type strains. In this study, we report the development and characterization of mutant C. thermocellum strains that can grow in the presence of high ethanol concentrations. Starting from a single colony, wild-type C. thermocellum ATCC 27405 was sub-cultured and adapted for growth in up to 50 g/L ethanol using either cellobiose or crystalline cellulose as the growth substrate. Both the adapted strains retained their ability to grow on either substrate and displayed a higher growth rate and biomass yield than the wild-type strain in the absence of ethanol. With added ethanol in the media, the mutant strains displayed an inverse correlation between ethanol concentration and growth rate or biomass yield. Genome sequencing revealed six common mutations in the two ethanol-tolerant strains including an alcohol dehydrogenase gene and genes involved in arginine/pyrimidine biosynthetic pathway. The potential role of these mutations in ethanol tolerance phenotype is discussed.