With the inevitable depletion of petroleum-based resources, there has been an increasing worldwide interest in renewable resources such as biomass. One reason for the current approaches being taken to utilize biomass is the difficulty in processing lignocellulosic materials and the energy needed for separation of the components. The three major components of biomass are covalently bonded together, which makes dissolution and further separation of the three major components difficult and this has been recognized as the grand challenge for biomass utilization. This dissertation describes research efforts in processing of lignocellulosic biomass using ionic liquids (ILs) as solvents. ILs are salts with melting points below 100 oC, which possess many advantage properties. Cellulose composite fibers have been prepared based on IL solution with dispersion of the additives. Wood and bagasse have been completely dissolved in ILs. Partial separation of the components has been obtained using selected reconstitution solvents. High temperature and fast dissolution was found to be an efficient method for both dissolution and separation of biomass components. Biomass composite fibers can be prepared directly from such biomass solutions. With selected catalysts in solution, improved dissolution and separation has been achieved, making the delignification and pulp yield comparable to the kraft pulping process.