In accordance with priorities of sustainable development in Serbia, production and use of biomass is crucial for provision of annually renewable national sources of energy and for environmental quality conservation. Rural development has typically focused on improving agricultural production and promoting market orientation, however, as the examples of other countries in the EU accession process have shown (e.g. Slovakia), such an approach could threaten the survival of rural population. Biomass production is one of the key sectors with significant potential for diversification of rural economy. The results of multiannual research work supported by the Ministry of Education, Science and Technological Development of the Republic of Serbia through national scientific projects and several international initiatives are summarized in this paper. The research activities focus on