AbstractThis study demonstrates the economic feasibility of producing renewable transportation drop‐in fuels from lignocellulosic biomass through hydrothermal liquefaction and upgrading. An Aspen Plus® process model is developed based on extensive experimental data to document a techno‐economic assessment of a hydrothermal liquefaction process scheme. Based on a 1000 tonnes organic matter per day plant size capacity, three different scenarios are analyzed to identify key economic parameters and minimum fuel selling prices (MFSP). Scenario I, the baseline scenario, is based on wood‐glycerol co‐liquefaction, followed by thermal cracking and hydroprocessing. Results show that a minimum fuel selling price (MFSP) of 1.14 $ per liter of gasoline equivalent (LGE) can be obtained. In Scenario II, only wood is used as feedstock, which reduces the MFSP to 0.82 $/LGE. Scenario III is also based on a pure wood feedstock, but investigates a full saturation situation (a maximum hydrogen consumption scenario), resulting in a slightly higher MFSP of 0.94 $/LGE. A sensitivity analysis is performed identifying biocrude yield, hydrogen, and feedstock prices as key cost factors affecting the MFSP. In conclusion, the study shows that renewable fuels, via HTL and upgrading, can be highly cost competitive to other alternative fuel processes. © 2017 The Authors. Biofuels, Bioproducts and Biorefining published by Society of Chemical Industry and John Wiley & Sons, Ltd.