The sustainability of large-scale biofuel production has recently been called into question in view of mounting concerns over the associated impact on land and water resources. As the most predominant biofuel today, ethanol produced from food crops such as corn in the US has been frequently criticised. Ethanol derived from cellulosic feedstocks is likely to overcome some of these drawbacks, but the production technology is yet to be commercialised. Sugarcane ethanol is the most efficient option in the short term, but its success in Brazil is difficult to replicate elsewhere. Agaves are attracting attention as potential ethanol feedstocks because of their many favourable characteristics such as high productivities and sugar content and their ability to grow in naturally water-limited environments. Here, we present the first life cycle energy and greenhouse gas (GHG) analysis for agave-derived ethanol. The results suggest that ethanol derived from agave is likely to be superior, or at least comparable, to that from corn, switchgrass and sugarcane in terms of energy and GHG balances, as well as in ethanol output and net GHG offset per unit land area. Our analysis highlights the promising opportunities for bioenergy production from agaves in arid or semi-arid regions with minimum pressure on food production and water resources.