A process and system for separating and upgrading bio-oil into renewable fuels is provided. The process comprises separating bio-oil into a light fraction and heavy fraction based on their boiling points. The heavy fraction is then subjected to hydrotreatment, while the light fraction is not subjected to hydrotreatment. At least a portion of the un-hydrotreated light fraction and at least a portion of the hydrotreated heavy fraction are blended with petroleum-derived gasoline to thereby provide a renewable gasoline, and at least a portion of the hydrotreated heavy fraction is blended with petroleum-derived diesel to thereby provide a renewable diesel.