Abstract: The present invention relates to the field of biomass derived fuels. It further relates to thermochemical production of liquids (biooils) from biomass. Specifically the present invention relates to methods of upgrading biooil. More specifically it relates to a method for upgrading biooil comprising contacting a dispersed mixture of hydrocarbon liquids, biooil, and partially upgraded biooil, with a transition metal containing catalyst and hydrogen gas at a temperature of around 330° C. and a pressure of about 1700 psi (11.7 MPa) for a period of time sufficient to reduce the oxygen content of the biooil such that it separates on cooling into an aqueous phase and an organic phase, and optionally, to further subject the organic phase to hydrotreating, hydrocracking or catalytic cracking to produce a mixture of hydrocarbons boiling in the range of gasoline, diesel and jet fuel.