Economical production of biofuels from renewable biomass is critically important for reducing our dependence on the fast diminishing fossil fuels. Escherichia coli can ferment both pentose and hexose sugar constituents and has been engineered to produce ethanol and butanol. However, E. coli is not natively tolerant to these organic solvents. In this study, we seek to develop E. coli strains with enhanced solvent tolerance and to understand the genetic basis of such tolerance. Strains with significantly enhanced tolerance were obtained by challenging with increasing concentrations of ethanol/butanol. In addition, E. coli strains overexpressing certain genes were studied to identify the genes involved in solvent tolerance. Overexpression of the gene rob was found to increase the tolerance to ethanol. Our genetic engineering approach yielded an improved E coli strain that demonstrated a butanol MIC of more than double that of the wild type. Additionally, the engineered strain was capable of growth in medium containing 2.1% butanol with a growth yield that was 60% of that of the wild type grown in butanol-free medium. By increasing the solvent tolerance of E. coli, it is possible to improve alcohol production and reduce purification costs leading to higher product yield and profits.