Abstract Background The model bacterium Clostridium cellulolyticum efficiently degrades crystalline cellulose and hemicellulose, using cellulosomes to degrade lignocellulosic biomass. Although it imports and ferments both pentose and hexose sugars to produce a mixture of ethanol, acetate, lactate, H2 and CO2, the proportion of ethanol is low, which impedes its use in consolidated bioprocessing for biofuels production. Therefore genetic engineering will likely be required to improve the ethanol yield. Plasmid transformation, random mutagenesis and heterologous expression systems have previously been developed for C. cellulolyticum, but targeted mutagenesis has not been reported for this organism, hindering genetic engineering. Results The first targeted gene inactivation system was developed for C. cellulolyticum, based on a mobile group II intron originating from the Lactococcus lactis L1.LtrB intron. This markerless mutagenesis system was used to disrupt both the paralogous L-lactate dehydrogenase (Ccel_2485; ldh) and L-malate dehydrogenase (Ccel_0137; mdh) genes, distinguishing the overlapping substrate specificities of these enzymes. Both mutations were then combined in a single strain, resulting in a substantial shift in fermentation toward ethanol production. This double mutant produced 8.5-times more ethanol than wild-type cells growing on crystalline cellulose. Ethanol constituted 93% of the major fermentation products, corresponding to a molar ratio of ethanol to organic acids of 15, versus 0.18 in wild-type cells. During growth on acid-pretreated switchgrass, the double mutant also produced four times as much ethanol as wild-type cells. Detailed metabolomic analyses identified increased flux through the oxidative branch of the mutant's tricarboxylic acid pathway. Conclusions The efficient intron-based gene inactivation system produced the first non-random, targeted mutations in C. cellulolyticum. As a key component of the genetic toolbox for this bacterium, markerless targeted mutagenesis enables functional genomic research in C. cellulolyticum and rapid genetic engineering to significantly alter the mixture of fermentation products. The initial application of this system successfully engineered a strain with high ethanol productivity from cellobiose, cellulose and switchgrass.