Lignocellulosic biomass (LCB) is produced in large quantities throughout the world every year and represents a major sink for photosynthetically fixed carbon. However, in some countries, lignocellulosic materials are viewed as agricultural by-products and are often burned to quickly prepare the land for the next cropping season. This environmentally unfriendly practice contributes to greenhouse gas (GHG) emissions and the loss of renewable carbon-based resources. When used properly, LCB can be an inexhaustible source of renewable energy, soil conditioners, and other sustainable materials. To this end, leveraging microbial power to unlock the multifunctional value of LCB is presented as one of the very promising pathways toward sustainable development. However, LCB, despite its high carbon content, has a low nitrogen concentration, which may limit its microbial degradation in environments with little or no additional nitrogen. Fortunately, some cellulolytic bacteria can produce bioavailable nitrogen through nitrogen fixation and play a key role in LCB digestion in wood-boring organisms. In this review, we discuss how cellulolytic nitrogen-fixing bacteria (CNFB) can enhance the conversion of LCB into various bioproducts (e.g., biofuels and soil conditioners). Based on the knowledge of the biotechnological potential of CNFB disseminated in this review, there are prospects for further research to biovalorize LCB towards a carbon-neutral circular economy.