Abstract: A method of producing an upgraded bio-oil from a wet biomass that includes heating the wet biomass at a first temperature and a first pressure for a time period ranging from 10 to 200 minutes to form a crude bio-oil. The first temperature ranges from 200 to 400° C. and the first pressure ranges from 0.1 to 25 MPa, with the proviso that at least a portion of the water present in the wet biomass remains in a liquid phase throughout the step of heating to form the crude bio-oil, and the first temperature and pressure are below super-critical conditions for water. The method also includes heating the crude bio-oil and the water at a second temperature and a second pressure to form the upgraded bio-oil. Some water remains in the liquid phase or in a super-critical fluid phase throughout the step of heating to form the upgraded bio-oil.