The only method currently used for producing oil from oil shale is high temperature retorting, which is wasteful of energy and gives oil with a high content of heavy oil. The novel method of extraction used in this study, involving supercritical propane with tetrahydrofuran as a co-solvent, solves the problem of the high cost of producing oil by conventional high temperature retorting. El-Lajjun oil shale from Jordan was used to evaluate the reaction yield and the characteristics of the product. At supercritical propane temperature and pressure (100 °C and 4.3 MPa), the yield was high and comparable to that for the conventional retorting method (>350 °C). As the temperature increased to 200 °C, the oil yield increased with pressure. The oil obtained was high in aliphatic hydrocarbons but with significant amounts of ethers, some carbonyls and sulfur-oxygen compounds. Hydrodeoxygenation and hydrodesulfurization of the produced oils using NiMo-Al-SBA-15 catalysts significantly enhanced the quality of the oil by decreasing the oxygen and sulfur contents and increasing the aliphatic and diesel fractions.This work leads to an enduring breakthrough technology that substantially reduces costs, waste, energy and the environmental impact of using oil shale as a raw material for liquid fuel production using Green Technology. Recovery of THF is high (>95%) and re-use of THF and propane would be essential for commercial application.