A continuous process is described whereby particulate woody materials are carbonized in a fluidized bed to form solid and gaseous fuel. The process includes injecting particulate woody materials, on a continuous basis, into a fluidized bed of previously carbonized material. Off-gas from carbonization with entrained charcoal fines is continuously removed from above the bed, and coarse charcoal is continuously removed from the surface of the bed. If desired, a high ash, coarse fraction may also be continuously removed from immediately above the bed grid. The off-gas and entrained fine charcoal are separated in a cyclone system, and the charcoal fines with the coarse charcoal fraction from the bed surface are collected for use as solid fuel. Off-gas from the separator may be scrubbed, if desired, or utilized directly as an enriched gaseous fuel. Alternate embodiments of the apparatus of this invention include an oval-shaped bed, or a toroidal bed with a plurality of feeders disposed at preselected positions extending into the bed to maximize the efficiency of the bed.