A bifunctional catalyst of Ru supported in zeolite HZSM-5, Ru/HZSM-5 (Si/Al = 25), exhibited excellent hydrodeoxygenation activity toward the conversion of lignin-derived phenolic monomers and dimers to cycloalkanes in aqueous solution. The oxygen-containing groups in mono- and binuclear phenols were removed through a cleavage of C–O bonds in phenolics followed by an integrated metal- and acid-catalyzed hydrogenation and dehydration. As a bifunctional catalyst Ru/HZSM-5, the presence of both the Brønsted acid site in the pores of HZSM-5 for dehydration and a metallic function of Ru for hydrogenation was indispensible for the formation of alkanes from lignin-derived phenolics. Our findings also reveal that the Ru/HZSM-5 with the lowest Si/Al ratio of HZSM-5 proved to be most selective to cycloalkanes, indicating that more acid sites over zeolite are favorable for the dehydration of cyclohexanol during hydrodeoxygenation process, which leads higher selectivity to hydrocarbons. This approach for the construction of bifunctional catalyst highlights an efficient route for hydrodeoxygenation of lignin-derived phenolic oil to transportation biofuels.