Abstract The increasing demand for sustainable energy sources has driven significant advancements in the field of bio‐oil production. This article scrutinizes catalytic pyrolysis for its ability to improve bio‐oil characteristics through the use of catalysts and optimization of process conditions. Critical parameters such as reaction temperature, heating rate, biomass feedstock, and catalyst type are analyzed for their influence on bio‐oil properties. Innovations in catalyst design, including the development of hierarchical zeolites, metal oxides, and bifunctional catalysts, are explored for their efficacy in deoxygenation, minimizing coke formation, and stabilizing bio‐oil. Additionally, advanced techniques like catalytic plasma pyrolysis and co‐pyrolysis with diverse feedstocks are investigated to further enhance bio‐oil quality. The techno‐economic analysis is conducted to assess the feasibility of these novel techniques, considering fixed and variable costs, and the market potential of the produced bio‐oil. This analysis aims to provide a holistic perspective on the economic viability and scalability of catalytic pyrolysis for bio‐oil production. This research contributes to the very recent advancement of bio‐oil production technologies, offering insights into optimizing process parameters and catalyst innovations. The findings facilitate more efficient and economically viable bio‐oil production methods, supporting the transition to renewable energy sources.