<p>Second-generation bioethanol (2G bioethanol) is widely recognized as a promising renewable fuel for mitigating climate change and enhancing energy security. Unlike first-generation routes based on edible feedstocks, 2G bioethanol utilizes lignocellulosic biomass, offering clear advantages in terms of resource sustainability. However, despite substantial advances in conversion technologies and pilot-scale validation, large-scale commercialization remains hindered by unresolved economic and technical challenges. This review systematically examines recent progress across key stages of the 2G bioethanol value chain, including feedstock utilization, pretreatment, enzymatic hydrolysis, fermentation strategies, and policy support. Attention is given to critical cost drivers, notably biomass logistics, pretreatment severity, and enzyme consumption, which continue to limit process viability. To address these challenges, a two-pathway framework is proposed. The first pathway emphasizes decentralized biomass processing integrated with centralized upgrading, aiming to reduce transportation costs and improve regional adaptability. The second pathway focuses on lignin-first fractionation, enabling co-production of bioethanol and value-added chemicals to enhance overall process economics. By linking technological advances with techno-economic performance, this review provides a structured perspective on how current bottlenecks can be mitigated and offers practical insights to guide the future development of scalable 2G bioethanol systems.</p>