The use of catalytic bed materials represents a state-of-the-art solution for controlling the concentration of tars in fluidized bed biomass steam gasifiers. Ash-coated olivine is commonly applied as a bed material in gasifiers, owing to its relatively high catalytic activity toward tar species. However, the mechanisms and conversion pathways that are influenced by the ash-coated olivine used as an in-bed catalyst are not fully understood. The present work examines how ash-layered olivine prevents the formation of biomass-derived tar at an early stage of their formation. Tests involving olivine at different stages of activation and at different temperatures were carried out in the Chalmers 2-4-MVVth DFB gasifier. A detailed characterization of the tar and light hydrocarbon fractions is presented and discussed in relation to the sources of the aromatic species. It is concluded that the ash-coated olivine prevents the formation of aromatic tar species by promoting steam reforming of early tar precursors. Gas-phase interactions of the early tar precursors and bed material contribute to the observed tar reduction. The results indicate that olivine interferes with the cyclization routes that involve C2H2 and C-3 hydrocarbons.