The present study was carried out to utilize the groundnut shell biomass for bio-oil production which has significant use in commercial sectors for eco-friendly green fuel and chemical generation. Spouted bed reactor was designed and developed for the production of bio-oil under various temperatures. Properties of the bio-oil were found by standard procedures. Compositional analysis of bio-oil was done by GC-MS and FTIR methods. Optimized production (40.7%) of biooil was obtained at 550 C temperature. Heating value of the bio-oil was found to be 21.5 MJ kg-1. Chemical compounds such as phenols, amines, amides and acids were reported in the analysis. The obtainedbio-oil can be used as fuel in transportation sector after upgradation and the derived chemicals have potential applications in pharmaceutical and resin industries.