As a highly effective nanocomposite for hydrothermal liquefaction (HTL) of microalgae, the recycled biochar synthesized from Spirulina platensis and impregnated into CeO2 has been demonstrated. The order of in situ > ex situ > biochar nanocomposites for higher bio-oil. The highest bio-oil conversion of 33% was achieved at the optimum temperature of 250 °C. The use of the biochar nanocomposite also resulted in a decrease in the oxygen and nitrogen content of the bio-oil and an increase in its heating value, which was found to be high at 35.64 MJ/kg. With the inclusion of the in situ biochar nanocomposite, energy recovery was increased by up to 65.34%. The current study has shown that low biochar nanocomposite concentrations (0.20 g), low temperature (250 °C), and short residence time (30 min) are essential for improved bio-oil yield and quality of bio-oil.