A reaction system for enhancing acetic acid production by a two-step process in a subcritical water condition was developed. The two-step process consisted of both a hydrothermal reaction without supply of oxygen (the first step) and a wet oxidation reaction (the second step). The first step would accelerate the formation of 5-hydroxymethyl-2-furaldehyde (HMF), 2-furaldehyde (2-FA), and lactic acid (LA), because they could produce a large amount of acetic acid by their oxidation, and the second step will further convert HMF 2-FA and LA produced in the first step to acetic acid by wet oxidation with oxygen newly supplied. Results obtained by a batch reactor had shown the acetic acid yield obtained in the two-step process was approximately twice that obtained by the usual WO procedure. Based on the results with the batch reactor, a continuous flow reaction system with the maximum treatment capacity of 50 kg/day of dry biomass was constructed. Results obtained in the continuous-flow reaction system were almost the same as those obtained in the batch study. That is, the acetic acid yield was over 20% for rice hulls, which occurred at 300°C, residence time of 2 min in the first step, and 300°C, 75% of oxygen supply and residence time of 1 min in the second step. This is an abstract of a paper presented at the 7th World Congress of Chemical Engineering (Glasgow, Scotland 7/10-14/2005).