1,3-propanediol is prepared in a process comprising the steps of:contacting ethylene oxide with carbon monoxide and hydrogen in an essentially non-water-miscible solvent in the presence of an effective amount of a non-phosphine-ligated cobalt catalyst and an effective amount of a lipophilic quaternary ammonium salt at a temperature within the range of about 50.degree. to about 100.degree. C. and a, pressure within the range of about 500 to about 5000 psig, under reaction conditions effective to produce an intermediate product mixture comprising less than 15 wt % 3-hydroxypropanal;adding an aqueous liquid to said intermediate product mixture and extracting into said aqueous liquid at a temperature less than about 100.degree. C. a major portion of the 3-hydroxypropanal so as to provide an aqueous phase comprising 3-hydroxypropanal in greater concentration than the-concentration of 3-hydroxypropanal in said intermediate product mixture and an organic phase comprising at least a portion of the cobalt catalyst or a cobalt-containing derivative thereof and at least a portion of the lipophilic quaternary ammonium salt;contacting the aqueous phase comprising 3-hydroxypropanal with hydrogen in, the presence of a hydrogenation catalyst at a pressure of at least about 100 psig and a temperature during at least a portion of the hydrogenation step of at least 40.degree. C. to provide a hydrogenation product mixture comprising 1,3-propanediol.