The urgent demand for alternative energy sources has been sparked by the tremendous burden on fossil fuels and the resulting acute energy crisis and climate change issues. Lignocellulosic biomass is a copious renewable and alternative bioresource for the generation of energy fuels and biochemicals in biorefineries. Different pretreatment strategies have been established to overcome biomass recalcitrance and face technological challenges, such as high energy consumption and operational costs and environmental hazards, among many. Biological pretreatment using microbial enzymes is an environmentally benign and low-cost method that holds promising features in the effective pretreatment of lignocellulosic biomass. Due to their versatility and eco-friendliness, cellulases, hemicellulases, and ligninolytic enzymes have been recognized as “green biocatalysts” with a myriad of industrial applications. The current review provides a detailed description of different types of lignocellulolytic enzymes, their mode of action, and their prospective applications in the valorization of lignocellulosic biomass. Solid state fermentation holds great promise in the microbial production of lignocellulolytic enzymes owing to its energy efficient, environment friendly, and higher product yielding features utilizing the lignocellulosic feedstocks. The recent trends in the application of enzyme immobilization strategies for improved enzymatic catalysis have been discussed. The major bottlenecks in the bioprocessing of lignocellulosic biomass using microbial enzymes and future prospects have also been summarized.