Upgrading of Estonian shale oil fraction boiling at 180-240 degrees C, the so-called "diesel fraction", characterized by sulfur content 0.85 % and polar heteroatomic compound content 20 % after dephenolation, was effected by hydrogenation in an autoclave at 370 degrees C using a Co-Mo catalyst Chemical group composition and changes in the composition of functional groups occurring at hydrogenation of the "diesel fraction" were determined. Hydrogen consumption potential of the "diesel fraction" was estimated in multistep hydrogenation experiments. It was concluded that hydrogenation proceeds rapidly, nonaromatic hydrocarbons being formed dominantly.