Biorefinery processing of biofuel and chemical production from biomass faces several challenges. Factors that inversely affect the production of bioethanol by fermentation include toxicity to the microorganism by high ethanol concentration during processing. The removal of ethanol by distillation involves operating at a high temperature, which damage the microorganisms with high energy consumption. Bio-oil is a complex mixture containing thermally unstable components. Furthermore, bio-oil characterised by high water content, acidity and other properties that setup many obstacles in its applications. In addition, in solvent extraction of biomass lipid components, the solvent is usually retrieved by distillation. Due to the high temperature during the process, the lipid and biomass components may be degraded. In the current study, microbubble distillation has been introduced as a novel technology for separation of a thermally sensitive mixture. The results showed that the microbubble distillation has achieved higher separation efficiency compared to that obtained with fine bubble distillation. Thereafter, microbubble distillation has been applied to separate ethanol and water mixtures. The study showed that the liquid level and air temperature could be engineered to achieve high separation efficiency compared to that obtained from an idealised equilibrium distillation stage, while the liquid mixture temperature was far from the mixture's boiling point. Microbubble distillation also has been applied to upgrade a simulated bio-oil mixture. The mixture was contained water, acetic acid, cyclohexanone, and salicylaldehyde. Post-treatment, it was shown that the mixture was free of water and 86% of the acetic acid was removed after 120 minutes, and no polymerization or other ageing reactions occurred during the process. Additionally microbubble distillation has been shown capable of separation azeotropic mixtures. Microbubble distillation is a potential replacement for traditional distillation in biorefining processes. The technology could be controlled to give high separation and energy efficiency. This could contribute to improving commercial viability of biofuel and other co-products biorefinery process.