The study aims to investigate the hydrogenation of lignin-derived bio-oil (known as lignin bio-oil) and β-O-4 linkages, which are representative lignin model compounds. The hydrogenation of these molecules produces cyclic hydrocarbons and aromatic platform chemicals. H-NbOx was synthesized using a hydrothermal method, followed by an acid treatment of Nb2O5. Three wt % Pd and 3 wt % Ni were deposited over H-NbOx to form an alloyed PdNi/H-NbOx catalyst. XPS, NH3-TPD, and O2-TPD revealed intrinsic active sites, metal–support interactions, and modified oxygen vacancies, making it highly efficient for the hydrogenation of 2-phenoxy-1-phenylethanol (PPE-OL) in dodecane using 3 MPa hydrogen. The hydrogenation of PPE-OL yielded >98% cyclic hydrocarbons (cyclohexane and ethyl cyclohexane). In contrast, 3Pd/H-NbOx and 3Ni/H-NbOx showed varied selectivity, producing a mixture of ethylbenzene, phenol, ethyl cyclohexane, and cyclohexanol. Notably, catalytic transfer hydrogenation (CTH) resulted in the formation of >99% aromatics (phenol and ethylbenzene) in isopropanol. Expanding the investigation from model compounds, PdNi/H-NbOx was utilized to hydrogenate lignin bio-oil derived from wheat straw, yielding saturated cyclic alcohols with a high yield at 250 °C in isopropanol. It underscores the potential of the developed protocol to effectively meet energy demands by generating aromatics via catalytic transfer hydrogenation and cyclic hydrocarbons via hydrogenation.