Microwave-induced catalytic fast pyrolysis of medicinal herb residue was implemented to produce biofuel with the use of ZSM-5 catalyst and microwave receptive material (SiC). This research aims to explore the effect of reaction atmosphere on the pyrolytic product yields and oil chemical compositions. The results demonstrate that CO atmosphere leads to the lowest total liquid and oil fraction yields and the highest water yield. The hydrocarbon relative contents in bio-oil of the four reaction atmospheres follow the order of CO > CO2 > H-2 approximate to N-2, while the oxygenate relative contents in bio-oil show the opposite tendency. Further, CO atmosphere gives rise to the lowest selectivity of methoxy-containing phenols in oil fraction and thus can favor the production of a more stable pyrolytic bio-oil. Additionally, CO2 atmosphere causes the highest yield of syngas (CO + H-2), which can be used as high quality fuel.