Complete hydrolysis of cellulose has been a key characteristic of biomass technology because of the limitation of industrial production hosts to use cellodextrin, the partial hydrolysis product of cellulose. Cellobiose, a β-1,4-linked glucose dimer, is a major cellodextrin of the enzymatic hydrolysis (via endoglucanase and exoglucanase) of cellulose. Conversion of cellobiose to glucose is executed by β-glucosidase. The complete extracellular hydrolysis of celluloses has several critical barriers in biomass technology. An alternative bioengineering strategy to make the bioprocessing less challenging is to engineer microbes with the abilities to hydrolyze and assimilate the cellulosic-hydrolysate cellodextrin. Microorganisms engineered to metabolize cellobiose rather than the monomeric glucose can provide several advantages for lignocellulose-based biorefineries. This review describes the recent advances and challenges in engineering efficient intracellular cellobiose metabolism in industrial hosts. This review also describes the limitations of and future prospectives in engineering intracellular cellobiose metabolism.