Abstract: The function mechanism of phenol in the liquefaction process under acid conditions was discussed. As nucleophilic reagent, phenol could break some important chemical bonds in the wood and degrade large wood molecules into small ones. As reaction reagent, phenol could react with the degraded small molecules to form compounds with phenolic structure. As solvent, phenol could dissolve liquefaction products with phenolic structure and could prevent or weaken the condensation reaction among the small active molecules.The acid functioned as catalyst in the reaction process to provide H⁺ protons and build acid environment, which made it easier to break the chemical bonds and changed the approaches of liquefaction reaction at the same time.