We report a catalytic process to convert cellulose into liquid hydrocarbon fuels (diesel and gasoline), using a cascade strategy to achieve the progressive removal of oxygen from biomass, allowing the control of reactivity and facilitating the separation of products. The process starts with the deconstruction of solid cellulose in an aqueous solution of sulfuric acid yielding an equi-molar mixture of levulinic acid and formic acid. The formic acid in this mixture can then be used (upon decomposition to H-2 and CO2) to reduce levulinic acid to gamma-valerolactone (GVL) in the sulfuric acid solution over a Ru/C catalyst. The formation of GVL allows strategies for the separation and recycling of the sulfuric acid used in the cellulose deconstruction step. This GVL product, with residual amounts of sulfur, can be upgraded to 5-nonanone with high yields (90%) in a single reactor by using a dual catalyst bed of Pd/Nb2O5 plus ceria-zirconia. The 5-nonanone product is hydrophobic and separates spontaneously from water, yet possesses a functional group that can be used to control the structure and molecular weight of hydrocarbon fuel components formed in downstream catalytic upgrading treatments. (C) 2010 Elsevier B.V. All rights reserved.