The objective of the proposed research is the demonstration and development of a novel biomass pyrolysis technology for the production of a stable bio-oil. The approach is to carry out catalytic hydrodeoxygenation (HDO) and upgrading together with pyrolysis in a single fluidized bed reactor with a unique two-level design that permits the physical separation of the two processes. The hydrogen required for the HDO will be generated in the catalytic section by the water-gas shift reaction employing recycled CO produced from the pyrolysis reaction itself. Thus, the use of a reactive recycle stream is another innovation in this technology. The catalysts will be designed in collaboration with BASF Catalysts LLC (formerly Engelhard Corporation), a leader in the manufacture of attrition-resistant cracking catalysts. The proposed work will include reactor modeling with state-of-the-art computational fluid dynamics in a supercomputer, and advanced kinetic analysis for optimization of bio-oil production. The stability of the bio-oil will be determined by viscosity, oxygen content, and acidity determinations in real and accelerated measurements. A multi-faceted team has been assembled to handle laboratory demonstration studies and computational analysis for optimization and scaleup.