Embodiments of methods and apparatuses for deoxygenating a biomass-derived pyrolysis oil are provided. In one example, a method comprises the steps of separating a low-oxygen biomass-derived pyrolysis oil effluent into a low-oxygen-pyoil organic phase stream and an aqueous phase stream. Phenolic compounds are removed from the aqueous phase stream to form a phenolic-rich diluent recycle stream. A biomass-derived pyrolysis oil stream is diluted and heated with the phenolic-rich diluent recycle stream to form a heated diluted pyoil feed stream. The heated diluted pyoil feed stream is contacted with a deoxygenating catalyst in the presence of hydrogen to deoxygenate the heated diluted pyoil feed stream.