The development of catalytic C–C bond formation schemes based on renewable substrates is important for defining sustainable paradigms for chemical manufacturing. With a few exceptions, aldol condensation reactions between biomass-derived platform chemicals have received little attention so far. Here the C–C coupling between 1,3-dihydroxyacetone (DHA) and formaldehyde into α-hydroxy-γ-butyrolactone (HBL) using Sn-Beta is demonstrated. Reactivity studies, coupled with spectroscopic and computational analyses, show that the formation of HBL proceeds by soft enolization of DHA followed by an aldol addition of formaldehyde to the Sn-enolate intermediate, generating erythrulose as an intermediate species. Isotopic labeling is used to reveal the position where formaldehyde is incorporated into HBL, providing further support for our proposed mechanism. Finally, combining the C–C coupling reaction with transfer hydrogenation of formaldehyde has allowed us to expand the substrate scope to include polyols glycerol and ethylene glycol.