This paper examines some of the economic tradeoffs in the joint production of biochar and bio-oil from cellulosic biomass. The pyrolysis process can be performed at different final temperatures, and with different heating rates. While most carbonization technologies operating at low heating rates (large biomass particles) result in higher yields of charcoal, fast pyrolysis (which processes small biomass particles) is the preferred technology to produce bio-oils. Varying operational and design parameters can change the relative quantity and quality of biochar and bio-oil produced for a given feedstock. These changes in quantity and quality of both products affect the potential revenue from their production and sale. We estimate quadratic production functions for biochar and bio-oil. The results are then used to calculate a product transformation curve that characterizes the yields of bio-oil and biochar that can be produced for a given amount of feedstock, movement along the curve corresponds to changes in temperatures, and it can be used to infer optimal pyrolysis temperature settings for a given ratio of biochar and bio-oil prices. (C) 2011 Elsevier Ltd. All rights reserved.