Biomass pyrolysis is an efficient way to transform raw biomass or organic waste materials into useable energy, including liquid, solid, and gaseous materials. Levoglucosan (1,6-anhydro-beta-D-glucopyranose) and formaldehyde are two important products in biomass pyrolysis. The formation mechanism of these two products was investigated using the density functional theory (DFT) method based on quantum mechanics. It was found that active anhydroglucose can be obtained from a cellulose homolytic reaction during high-temperature steam gasification of the biomass process. Anhydroglucose undergoes a hydrogen-donor reaction and forms an intermediate, which can transform into the products via three pathways, one (path 1) for the formation of levoglucosan and two (paths 2 and 3) for formaldehyde. A total of six elementary reactions are involved. At a pressure of 1 atm, levoglucosan can be formed at all of the temperatures (450-750 K) considered in this simulation, whereas formaldehyde can be formed only when the temperature is higher than 475 K Moreover, the energy barrier of levoglucosan formation is lower than that of formaldehyde, which is in agreement with the mechanism proposed in the experiments.