Problem statement: World energy consumption is forecasted to grow significantly for the foreseeable future with fossil fuel remains the governing energy source. The demand in the need to explore alternative fuel source was further triggered by the overwhelmingly inconsistent cost of gasoline. Bio-oil is an alternative energy source produced from pyrolysis of biomass. However it is undesirable as a ready alternative transportation fuel due to its unfavorable nature i.e., highly oxygenated and low octane number. To overcome these physicochemical issues, hydrodeoxygenation reaction is a possible upgrading method i.e., by partial or total elimination of oxygen and hydrogenation of chemical structures. Hence, this study aimed to investigate feasible routes and to develop the process route to upgrade the pyrolytic bio-oil from biomass into value-added chemicals for the production of transportation fuel, i.e., benzene and cyclohexane, via hydrodeoxygenation process via simulation in PETRONAS iCON software. Approach: In this study, hydrodeoxygenation of phenols and substituted phenols was used to represent the hydrodeoxygenation of the major oxygen compound in bio-oil due to their low reactivity in HDO. Results: By assuming the feedstock used was 1 of the total palm shell available in Malaysia, i.e., 2,587 kg h-1 bio-oil, the simulation predicted the production of 226 kg h-1 benzene, 236 kg h-1 cyclohexane and 7 kg h-1 cyclohexene, with the yield of 34, 81 and 3 respectively. The preliminary economic potential was calculated to be positive. It was also observed that hydrogen was the limiting reactant in the hydrogenation reaction. Conclusion/Recommendations: The simulation study indicated positive technical and economic feasibility of hydrodeoxygenation of pyrolytic bio-oil from biomass into benzene and cyclohexane for the transportation fuel industry. This potential can be explored in more details and further findings can promote the prospect of co-processing bio-oil in standard refinery units to produce chemicals and fuels. © 2010 Science Publications.