The abundance of biomass in Indonesia are potential to be utilised as a material for biofuel production. Pyrolysis can be employed to convert biomass into syngas that can be condensed into pyrolysis oil or known as bio-oil. Biomass as a material for biofuel production is available in a large quantity thus avoid the competition with materials for food source, and inexpensive. Current bio-oil research mainly studies the process of converting biomass into bio-oil from inexpensive sources, such as food crops, timber waste and agro-industrial waste. The components of bio-oil are water and organic compounds (hydrocarbons), which are traditionally produced from petroleum. Due to the depletion of petroleum reserves, bio-oil has the potential to be developed into a source of petroleum-supporting fuels. The present study reviews the status of bio-oil research and development in Indonesia, including the potential biomass sources, the latest technologies to convert and utilise bio-oil as a fuel, and government policies on the application of bio-oil in Indonesia. This review is expected to be used as a basis for the development of bio-oil policy and scientific and technological utilisation of bio-oil in Indonesia.