Abstract The removal of nitrogen (N) and sulphur (S) from biocrude oil produced using hydrothermal liquefaction (HTL), is important for the production of high quality renewable fuels. Here the effect of co-liquefaction of bagasse and algae was analysed. Algae (Chlorella vulgaris and Cyanobacteria) were mixed with bagasse (1:1) subjected to HTL at 250–350 °C for 10–60 min. Higher HTL temperatures had a positive effect in increasing the biocrude yield and slightly reduced N content; S did not show a consistent trend. Most of the nitrogen (~66%) and sulphur (~80%) were recovered in the aqueous phase rather than in the biocrude phase, opening the opportunity to recycle these nutrients for algae cultivation. Co-liquefying bagasse with algae improved the biocrude yield (54 wt%) compared to pure Cyanobacteria (47.5 wt%). It also reduced N content from 7 wt% (Cyanobacteria biocrude) to 4.2 wt% (Cyanobacteria: Bagasse) and S from 0.7 wt% to 0.4 wt%. Principal Component Analysis (PCA) analysis identified that biocrude yield is positively correlated with the initial lipid content and anti-correlated with the carbohydrates fraction. Biocrude N content is closely related to the initial amount of proteins in the algae. The Preference Ranking Organization METHod for Enrichment of Evaluations and its descriptive complement Geometrical Analysis for Interactive Aid (PROMETHEE and GAIA) analysis ranked the co-liquefaction of Chlorella vulgaris and bagasse (1:1) at 350 °C and 60 min as one of the best overall combination in terms of biocrude yield, N and S content.