Ethanol is currently viewed as a promising liquid fuel alternative to gasoline. The thermochemical route for the production of mixed alcohols from lignocellulosic biomass via direct gasification is presented. The process involves the use of high-pressure oxygen blown gasifier to produce syngas; reforming and cleanup of the syngas, followed by synthesis to mixed alcohols. This techno-economic evaluation studies the minimum ethanol selling price from such a process. It looks at the cost distribution across various sections of the process. Technological improvements are necessary in the areas of tar reforming and alcohol synthesis to bring down processing costs. Efficient and cost-effective catalysts for these operations will be the most important areas of development. Sensitivity of production cost to developments in these areas is discussed. Improvements are also expected in the design and reliability of gasifiers. Other significant parts of the process are already mature and are used in commercial processes for other products. With the maturity of technology and achievement of projected improvements, feedstock will be the single largest cost component of lignocellulosic ethanol. The Air Separation Unit will always be a cost burden on the oxygen-blown gasification process.