Biomass-derived short oxygenates like furfural, cannot be directly incorporated into a fuel due to their low molecular weight. Therefore, conversion of these oxygenates into fuel range hydrocarbons via C-C bond forming reactions is a desirable path. For example, in aqueous phase, furfural can be first converted to stable cyclopentanol via Piancatelli ring rearrangement coupled with hydrogenation under reducing conditions. This alcohol can be an effective alkylating agent to incorporate into phenolic rings. Therefore, we have investigated the alkylation of m-cresol with cyclopentanol, as two representative compounds of biomass-derived streams to generate products in the molecular weight range that is appropriate for transportation fuels. This reaction was studied in single and biphasic liquid systems over a hydrophobized H-USY zeolite (Si/Al = 30). In biomass conversion, the presence of liquid water is practically unavoidable, so it is important to investigate methods to deal with its presence. We show here that hydrophobization of the H-USY with octadecyltrichlorosilane (OTS) makes the zeolite able to stabilize water/oil emulsions and catalyze the alkylation of m-cresol and cyclopentanol with enhanced stability. By contrast, under the same conditions, the untreated H-USY zeolite is fully deactivated in about 3 h. From all of these results, it was concluded that the rate of alkylation is strongly dependent on temperature, solvent, and rate of mass transport, which is directly affected by the solubility of reactants and intermediates. This investigation provides strategies to convert different families of biomass-derived oxygenates into cyclic hydrocarbons with potential properties to be used as bio-fuel precursors.