The liquefaction of biomass in ethanol, at the critical point, has high potential due to low temperature and pressure (243 °C, 63 bar) when compared with water (374 °C, 220 bar). The current study deals with the fractionation of birch wood powder which was liquefied under supercritical ethanol over acidic or non-acidic catalysts, 5 wt % Fe-Beta-H-150 and 5 wt % Fe–SiO2, respectively. Based on the results, the reaction mechanism for the formation of lignin degradation products was proposed. The main phenolic product was isoeugenol over 5 wt % Fe-Beta-H-150 while intermediate products, i.e. such as coniferyl, and sinapyl alcohol, 4-propenyl syringol, syringaresinol, as well as syringyldehyde reacted rapidly further. The thermodynamic analysis was performed by Joback approach and using Gibbs-Helmholtz equation supporting the obtained results.