This paper reports an investigation on the fundamental reaction mechanism of cellobiose decomposition in hot-compressed water (HCW) using a continuous reactor system at 225-275 degrees C. The importance of isomerization reactions to form two cellobiose isomers (i.e., cellobiulose and glucosyl-mannose) as the primary reaction products is clearly demonstrated under the reaction conditions, using a high-performance anion exchange chromatography with pulsed amperometric detection and mass spectrometry (HPAEC-PAD-MS). The results also confirm another two primary reactions take place during cellobiose decomposition in HCW: retro-aldol condensation reaction to produce glucosyl-erythrose (GE) and glycolaldehyde, and hydrolysis reaction to produce glucose. The data show that isomerization and retro-aldol condensation are the dominant primary reactions while hydrolysis of cellobiose is only a minor primary reaction (accounting for similar to 10-20% of cellobiose decomposition depending on reaction temperature). The results indicate that the reaction solution becomes acidic at the early stage of cellobiose decomposition, most likely due to the formation of organic acids, resulting in the subsequent reactions exhibiting more characteristics of acid-catalyzed reactions. The results further suggest that the formed acidic condition has little catalytic effects on the primary reactions of cellobiose decomposition, but is effective in catalyzing secondary reactions of various reaction intermediates such as hydrolysis and dehydration reactions to form glucose and 5-HMF, respectively.