A system and method for biomass pyrolysis utilizing chemical looping combustion of a produced char to capture carbon dioxide is disclosed. The system includes a biomass pyrolysis reactor, a char combustor, and oxidation reactor and a separator for separating carbon dioxide from flue gas produced by the char combustion. The pyrolysis reactor pyrolyzes biomass in the presence of reduced metal oxide sorbents producing char and pyrolysis oil vapor. The char is separated and combusted in the char combustor, in the presence of oxidized metal oxide sorbents, into a gaseous stream of carbon dioxide and water vapor. The carbon dioxide and water are separated so that a stream of carbon dioxide may be captured. The oxidation reactor oxidizes, in the presence of air, a portion of reduced metal oxide sorbents into oxidized metal oxide sorbents that are looped back to the char combustor to provide oxygen for combustion. A second portion of the reduced metal oxide sorbents is recycled from the char combustor to the pyrolysis reactor to provide heat to drive the pyrolysis. Pyrolysis oil upgrading catalyst particles may be used in addition to the metal oxide sorbents as heat energy carrier particles to improve the quality of the pyrolysis oil vapors produced in the pyrolysis reactor. Also, the metal oxide sorbents may have metals incorporated therein which serve to upgrade the pyrolysis vapors produced during pyrolysis. Non-limiting examples of such metals include Ni, Mo, Co, Cr, W, Rh, Ir, Re, and Ru.