AbstractBio-oil can be fractionated into three parts according to their boiling points. This research reported that light distillates could be converted into oxygenated liquid fuels through a two-stage hydrotreatment approach, using a Pd/C catalyst. The main goal of the first hydrotreatment stage was to stabilize the high active components, which contained carbon–carbon double bonds and aldehyde groups. The second hydrotreatment stage aimed to saturate the components with benzene rings and keto groups, resulting in saturated oxygenated compounds. The H/Ceff ratio was improved greatly after the two-stage hydrotreatment, increasing from 0.51 (in the reactant) to 1.67 (in the final products). The high heating value of the final products was 31.63 MJ/kg. After the two-stage hydrotreatment, the main products were C5–C9 alcohols, which were tested via gas chromatography–mass spectrometry. The products could be blended with gasoline directly. Based on the experiments regarding the hydrogenated model compounds, a reaction schematic for the two-stage hydrotreatment was created. Moreover, the bio-oil hydrotreatment kinetics were investigated. The order of the hydrotreatment reaction was 2.0, and the apparent activation energy (Ea) was 57.29 KJ/mol.