Lignocellulosic biomass wastes can be considered as renewable and abundantly available resources, but it is a big challenge to convert them into valuable products via environmentally friendly and cost-effective approaches. Herein, a facile two-step hydrothermal-pyrolysis method is developed to fully convert the lignocellulosic biomass wastes into N-doped biochar-stabilized Co nanoparticles (Co–N/biochar) and bio-oil enriched with value-added small compounds. The as-synthesized Co–N/biochar, with uniform N doping and well-dispersed Co nanoparticles, presents favorable activities for activating peroxymonosulfate (PMS) to degrade refractory organic contaminants. The underlying PMS activation and pollutant degradation mechanism is illuminated with free radical quenching experiments and an electron paramagnetic resonance analysis. The nonradical pathway is demonstrated to be dominant in the pollutant degradation with the PMS/Co–N/biochar system. The singlet oxygen (1O2) generated from PMS activation is identified as the main contribution species for the pollutant degradation process. This work will provide a new approach to fully convert the biomass wastes into bio-oil and functional biochar materials with prominent activities.