Fractionation of bio-oil is an important step in the development of an effective upgrading strategy of bio-oil to transport fuels and chemicals because it reduces bio-oil complexity and side reactions; however, the strategy should preferably make use of all fractions. We therefore fractionated bio-oil from fast pyrolysis of pine wood using water addition and liquid liquid extraction and studied its aqueous-phase oxidation to formic acid. One potential use of formic acid is as a hydrogen source for upgrading of the organic phase. The effects of the temperature, oxygen pressure, and concentration of substrates and phenolic compounds on the yield and selectivity of formic acid were investigated. Batch experiments revealed a yield of up to 56 wt % (dry basis) and high selectivity, after 30 min at 170 degrees C and 5.0 MPa. However, the presence of phenolic compounds in the aqueous phase and substrate concentrations greater than 3% were detrimental. Extraction of the aqueous phase with butyl acetate was effective for removing low-molecular-weight phenolic compounds and enhanced reaction rate and yield. Intrinsic acidity of aqueous bio-oil favored hydrolysis of anhydrosugars, but best results were obtained with the addition of an acid catalyst (1.4 wt % sulfuric acid). A low production of solids (<0.15 wt %) and gases (<1 wt %) makes wet oxidation a promising alternative for the processing of aqueous-phase bio-oil. Estimated hydrogen production from formic acid satisfied reported demands for catalytic hydrodeoxygenation of the organic phase.