1,3-Propanediol is prepared in a process comprising the steps of:contacting, in an essentially non-water-miscible organic solvent, ethylene oxide with carbon monoxide and hydrogen in the presence of a catalytic amount of a non-phosphine-ligated cobalt compound and an effective amount of a lipophilic quaternary phosphonium salt promoter 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, 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 a major portion of the 3-hydroxypropanal at a temperature less than about 100.degree. C. to provide an aqueous phase comprising 3-hydroxypropanal in greater concentration than the concentration of 3-hydroxypropanal in the intermediate product mixture, and an organic phase comprising at least a portion of the cobalt compound and at least a portion of the lipophilic quaternary phosphonium 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.