Global climate change caused by the accumulation of greenhouse gases (GHGs) has caused concerns regarding the continued reliance on fossil fuels as our primary energy source. Hydrocarbons produced from biomass using microbial fermentation processes can serve as high-quality liquid transportation fuels and may contribute to a reduction in GHG emissions. Here, we discuss the barriers and opportunities for bio-based production of hydrocarbons to be used as diesel and jet fuels and review recent advances in engineering microbes for production of these chemicals. There are two main challenges associated with establishing bio-based hydrocarbon production from cheap feedstocks; lowering the cost of developing efficient and robust microbial cell factories and establishing more efficient routes for biomass hydrolysis to sugars for fermentation. We discuss how to develop novel systems and synthetic biology tools that can enable faster and cheaper construction of microbial cell factories and thereby address the first challenge, as well as recent advances in biomass processing that will likely lead to overcoming the second challenge in the near future.