The development of efficient catalysts to break down and convert woody biomass will be a paradigm shift in delivering the global target of sustainable economy and environment via the use of cheap, highly abundant, and renewable carbon resources. However, such development is extremely challenging due to the complexity of lignocellulose, and today most biomass is treated simply as waste. The solution lies in the design of multifunctional catalysts that can place effective control on substrate activation and product selectivity. This is, however, severely hindered by the lack of fundamental understanding of (i) the precise role of active sites, and (ii) the catalyst-substrate chemistry that underpins the catalytic activity. Moreover, active sites alone often cannot deliver the desired selectivity of products, and full understanding of the microenvironment of the active sites is urgently needed. Here, we review key recent advances in the study of reaction mechanisms of biomass conversion over emerging heterogeneous catalysts. These insights will inform the design of future catalytic systems showing improved activity and selectivity.