As modernisation and urbanisation rise rapidly, they generate significant environmental challenges, including changes in the climate, lack of resources, and a buildup of untreated waste. In addition to this, there is a pressing need for economic models that focuses on sustainability and waste management. The circular bioeconomy can be a better solution to this global challenges which is increasing every day. Circular bioeconomy is based on two concepts: One is utilisation of renewable biological resources, and second is to minimise the waste by increasing the recycling methods and to improve the resource efficiency. Researchers are engaged in design of microorganisms that utilises waste as a form of substrate for production of valuable compounds. The utilisation of agro-industrial waste can mitigate environmental impacts, which promotes a sustainable source of valuable products. There are various products that can be produced by using lignocellulosic waste such as biofuels, biodiesel, proteins, amino acids, lactic acid, bioplastics, biopolymers and many. Currently, strain engineering of microorganisms can be the good strategy to produce these products. The microorganisms are known to be the cell factories for production of valuable compounds by using lignocellulosic waste as a substrate such as Escherichia coli, Saccharomyces cerevisiae, Bacillus subtilis, and many more. Another perspective of using these microbial cell factories for degradation of plastic and polymers by modifying the microorganisms using genetic engineering methods. Thus, by using the lignocellulosic waste, researchers can contribute towards the greener economy by reducing the waste that is otherwise left untreated.