NOVELTY - Producing (M1) bio-oil involves: (A) combining a bio-oil comprising bound water with an azeotrope agent to provide a treated bio-oil, where the azeotrope agent comprises at least one 6-10C water-insoluble hydrocarbon; and (B) subjecting the treated bio-oil to azeotropic distillation in an azeotropic distillation column to provide a water-rich overhead stream and a water-depleted bio-oil stream, where the water-rich overhead stream comprises at least 75 wt.% of the bound water originally present in the bio-oil.    USE - For producing water-depleted bio-oil (claimed), from bound-water-containing bio-oil. The water-depleted bio-oil is useful as biofuel or speciality chemicals.    ADVANTAGE - The process provides water-depleted bio-oil that is less corrosive, more stable, and readily miscible with hydrocarbons.    DETAILED DESCRIPTION - INDEPENDENT CLAIMS are included for the following:    (1) producing bio-oil, involving: (i) separating a biomass conversion product into a free water phase and a bio-oil phase, where the bio-oil phase comprises at least 1 wt.% bound water; (ii) removing the free water phase from the bio-oil phase; (iii) combining the bio-oil phase with an azeotrope agent to provide a treated bio-oil; (iv) subjecting the treated bio-oil to azeotropic distillation in an azeotropic distillation column to provide a water-rich overhead stream and a water-depleted bio-oil stream, where the azeotropic distillation is carried out at a top column pressure below atmospheric pressure and a bottom column temperature below 140 degrees C; (v) recovering at least a portion of the azeotrope agent from the azeotropic distillation column; and (vi) recycling at least a portion of the recovered azeotrope agent for use in step (c); and    (2) a system (S1) for producing a bio-oil, comprising: a biomass feedstock source for providing solid particulate biomass; a conversion reactor for thermally converting at least a portion of the biomass feedstock into a conversion product comprising condensable vapors; a condenser for condensing at least a portion of the condensable vapors into a free water phase and a bio-oil phase comprising bound water; a separator for removing at least a portion of the free water phase from the bio-oil phase; an azeotrope injector for introducing an azeotrope agent into at least a portion of the bio-oil phase to produce a treated bio-oil; an azeotropic distillation column for separating the treated bio-oil into a water-depleted bio-oil stream and a water-rich overhead stream; and an azeotrope agent transport mechanism for transporting at least a portion of the azeotrope agent from the azeotropic distillation column and to the azeotrope injector.