The present invention provides methods, reactor systems, and catalysts for converting in a continuous process biomass to less complex oxygenated compounds for use in downstream processes to produce biofuels and chemicals. The invention includes methods of converting the components of biomass, such as hemicellulose, cellulose and lignin, to water-soluble materials by using hydrogen and a heterogeneous liquefaction catalyst. The water-soluble materials include lignocellulosic derivatives, cellulosic derivatives, hemicellulosic derivatives, carbohydrates, starches, polysaccharides, disaccharides, monosaccharides, sugars, sugar alcohols, alditols, polyols, diols, alcohols, ketones, cyclic ethers, esters, carboxylic acids, aldehydes, and mixtures thereof.