Biomass pyrolysis oils have potential to be used as a fuel oil substitute. Combustion tests have shown that the oils burn efficiently in standard or slightly modified boilers and engines with rates similar to those for commercial fuels. However, these tests also identified several challenges in bio-oils applications resulting from their properties. The oils have heating values of only 40-50% of that for hydrocarbon fuels. They have a high water content that is detrimental for ignition. Organic acids in the oils are corrosive to common construction materials. Solids (char) can block injectors or erode turbine blades. Over time, reactivity of some components in the oils leads to formation of larger molecules that results in high viscosity and in slower combustion. This paper discusses physical and chemical characteristics of bio-oils relevant to fuel applications as well as some low-cost methods for improvement of these properties. It also provides bio-oil specifications proposed by some industrial users and recommendations for storage and handling.