In this study, we observed that cofactor imbalance is a major limiting factor for high yield bioconversion of proteins to mixed alcohols. To resolve the cofactor imbalance, we engineered two of the pathway enzymes, ketol-acid reductoisomerase (IlvC) and alcohol dehydrogenase (YqhD), to change the cofactor specificity from NADP+ to NAD+. Strains carrying individual and combined mutations showed yield improvements up to ~57% higher than native strain under micro-aerobic fermentation without the necessity of nutrient or vitamin addition. We subsequently reconstructed and optimized the mevalonate pathway in E. coli YH40 and produced a wide spectrum of terpene compounds from algal proteins, including a promising aviation fuel, caryophyllene. The highest titer of terpene produced from algal protein was 328 mg/L using protein as a sole carbon source. Mixed alcohols and sesquiterpenes have high potential as “drop-in” biofuel compounds in addition to algal lipids and fuels generated from the algal carbohydrate fraction. Integration of protein bioconversion with thermochemical processing of the biomass residuals was shown to be effective for reducing the nitrogen content of the combined biofuel products by >80%.