Among the feasible options for valorizing lignocellulosic biomass into value‐added products, biochar is considered to be extremely appealing and it could be applied easily in several established thermochemical processes. Biochar possesses a large surface area due to its porous nature, which permits easy use in various applications, including catalytic biofuel production. This work summarizes research on biochar generation processes, its critical physicochemical properties, and factors that influence them. Important studies adopting biochar catalysts for liquid biofuel production are critically reviewed, and the reaction mechanisms and biofuel yield are analyzed. Finally, challenges in the use of biochar‐based catalysts for biofuel production are presented, together with possible solutions. In general, this current work aims to provide the critical characteristics of biochar as a potential catalyst to biofuel synthesis toward sustainable bioenergy production.