Abstract This study compares two processes to produce γ-valerolactone from lignocellulosic biomass: Process A is single processing of cellulose by using lignin-derived propyl guaiacol solvent; Process B is simultaneous processing of cellulose and hemicellulose by using γ-valerolactone solvent derived from cellulose and hemicellulose. Large-scale processes that integrate conversion and separation technologies are assembled based on experimental data, and daily GVL productions are 98 tonnes (Process A) and 375 tonnes (Process B). A heat-exchanger network is designed to reduce heating requirements, and the energy efficiencies are 13.3% (Process A) and 37.3% (Process B). Techno-economic assessment is conducted to identify the economic feasibility. The minimum selling price of γ-valerolactone for Process A (US$ 2.36/kg) and Process B (US$ 0.88/kg) are comparable with market price. The difference in the minimum selling prices is mainly caused by effective utilization of the hemicellulose in lignocellulose biomass in Process B. Sensitivity analyses present that changes in key parameters could not reverse the minimum selling price of γ-valerolactone between the two strategies, but the conversion of xylose to value-added chemical in Process A makes this possible. This study shows that development of conversion technologies to effectively utilize the hemicellulose in lignocellulosic biomass is critical to improve process economics.