1,3-propanediol is prepared in a process comprising the steps of:(a) 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 arsine at a temperature within the range of about 50 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 about 15 wt % 3-hydroxypropanal;(b) 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 arsine;(c) separating the aqueous phase from the organic phase;(d) 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;(e) recovering 1,3-propanediol from said hydrogenation product mixture; and(f) returning at least a portion of the organic phase comprising cobalt compound and lipophilic arsine to the process of step (a).The process enables the production of 1,3-propanediol in high yields and selectivity without the use of a phosphine-ligated cobalt catalyst.