An overview of the water-soluble fractions of biomass and biomass ash (BA) and their significance for solid biofuel application was conducted based on reference peer-reviewed data plus our own investigations. Characteristics such as fluid matter and moisture of biomass, composition, and properties of water-soluble fractions isolated from biomass and BA are considered, including fraction yield, content of water-soluble elements, phase-mineral composition, pH, and electrical conductivity. It was found that the water-soluble fraction of biomass and BA is highly enriched in Cl, S, K, Na, N, and P and some hazardous trace elements with unfavorable modes of element occurrences such as alkaline chlorides, sulfates, nitrates, carbonates, oxalates, and some oxyhydroxides, phosphates, and amorphous material. These compounds provoke the most critical technological (slagging, deposit formation, fouling, and corrosion) and environmental (fine particle partitioning, volatilization of hazardous air pollutant elements, and contamination of air, water, soil, and plant) challenges during the thermochemical conversion of biomass and BA processing. The reduction or immobilization of the undesirable water-soluble components in salt-tolerant biomass and BA can be achieved by feedstock selection, modification of harvesting and fertilization practices, natural or industrial water washing, fuel blending, and use of additives before processing. On the other hand, the water-soluble fraction leached from biomass and BA can be utilized for the recovery of some elements, synthesis of some minerals and production of soil amendments and different materials, whereas the water-soluble components in BA can contribute for capture and storage of atmospheric CO2.