Biomass pyrolysis oil is converted into precursors for hydrocarbon transportation fuels by contacting the oil with liquid superheated water or supercritical water to depolymerize and deoxygenate the components of the oil and form the transportation fuel precursors. Temperatures above 200° C. and preferably above 300° C. are preferred with supercritical water at temperatures above 374° C. and pressures above 22 MPA providing the capability for fast conversion rates.