Converting biomass into liquid transportation fuel is of great importance for a secure energy supply. Though biomass pyrolysis offers a convenient avenue to produce a liquid fuel intermediate-bio-oil, a significant amount of effort is still demanded to overcome the poor oil properties towards its application as drop-in transportation fuel. These challenges include reducing bio-oil oxygen content, water content, acidity and improving its stability during storage and upgrading. The current research investigated the torrefaction effect on improving bio-oil physicochemical property and stability. In this study, fluidized-bed fast-pyrolysis was performed on torrefied loblolly pine with different torrefaction severities. The results showed that torrefaction pretreatment can significantly reduce the oxygen and water content and acidity of the bio-oil as well as varying bio-oil chemical composition with concentrated pyrolytic lignin and levoglucosan. A modified cellulose pyrolysis mechanism was proposed to explain the increased levoglucosan concentration in the torrefaction-based bio-oil. With regarding to the bio-oil stability, torrefaction based bio-oil showed less physicochemical and compositional variation than that of raw bio-oil. In addition, torrefaction based bio-oil could maintain a uniform oil phase for twelve-month storage. All these effects are attributed to the structural and compositional change of torrefied wood induced by the thermal pretreatment.