Due to various environmental and economic benefits, renewable energy has been developed rapidly in the United States over the past several decades. In this study, the status, challenges, and public policies related to the development of bioenergy products from forest-derived woody biomass were reviewed. At present, existing utilization of forest biomass for energy purpose in the United States has been dominated by the forest products industry in generating heat and power for internal use. Proposed forest biomass utilization for energy has focused on producing motor biofuels. Key conversion technologies for woody biomass are still undergoing research and development and are not yet fully viable for commercial production. Other challenges for forest biomass utilization include high harvesting and transportation costs, overlapping demand for some forest biomass, and market promotion for new bioproducts. Since the 1970s, many laws and polices have been passed to help and guide the development of bioenergy in the United States. Woody biomass utilization has received increasing attention and assistance in recent years.