Red mud, a main waste of aluminum industry containing high amount of Fe2O3 (20–30 %), was used for the first time post-reduction as iron source in the hydrothermal liquefaction (HTL) of pinewood; aiming to maximize bio-crude yield and quality, exploiting the Fe oxidation with water to produce in-situ H2. The red mud capacity to produce H2 was investigated reducing it with the hydrochar produced through HTL at 900 °C for 3h. Red mud catalytic activity in biomass decomposition reactions, attributed to the presence of Al2O3, TiO2, SiO2 etc., was also assessed testing the as-received (FRM) and calcinated (CRM, 900 °C-3h) samples. HTL tests were performed at 330 °C for 10 min, adding an amount of red mud containing 6 wt% of Fe with respect to the biomass. The reduced red mud (RRM) demonstrated the highest activity in the conversion of biomass into high quality bio-crude (yield of 49 wt%, HHV = 30.81 MJ/kg), acting both as H2 producer and as a catalyst. Furthermore, to minimize the process wastes, the recycle of water phase (WP) and the RRM was performed for 5 consecutive runs demonstrating the feasibility of the proposed process with a considerable increase of bio-crude yield (60 wt%) and quality (HHV = 30.89 MJ/kg).