A dual-compartment slot-rectangular spouted bed (DSRSB) reactor was designed and built to torrefy sawdust. The effects on torrefaction performance of temperature from 240 to 300 °C, sawdust feedrate from 600 to 1400 g/h and oxygen concentration from 0 to 9 vol% were explored. The temperature difference between the adjacent compartments was limited. Pressure drop across the reactor was affected by biomass feedrate, and was higher for the downstream compartment than for the upstream one. The weight loss of the sawdust was 9.3–38.2 wt%, while the energy yield was 65.7–99.6%. Oxidative torrefaction resulted in greater weight loss and lower energy yield than non-oxidative torrefaction. The product properties were significantly affected by the reactor temperature and oxygen concentration. Solids, liquid and gaseous products were characterized. The results showed that the DSRSB is a promising reactor for biomass torrefaction.