Coking is a major issue in catalytic pyrolysis of biomass over zeolite catalysts. Using oxidative gas might mitigate formation of carbonaceous deposits. This was verified herein by catalytic pyrolysis of lignin with different oxygen concentrations (0 %, 3 %, 6 %, 9 % and 12 %) in carrier gas using ZSM-5 as the catalyst at 600 °C. The results indicated that the O2 introduced oxidized both volatiles and biochar, reducing bio-oil yield from 29.2 to 20.7 % and biochar yield from 56.8 to 53.7 % with increasing O2 concentration from 0 to 12 %. Oxidation of intermediates in “hydrocarbon pool” on surface of catalyst decreased the yield of BTX from 11.5 % in inert gas to 6.1–8.0 % and also other aromatics with 1 or 2 benzene rings. The aromatics with rigid polycyclic aromatic structures were more resistant towards oxidation. However, toluene, xylene, and other aromatic hydrocarbons or phenolics with side chains were more prone to be oxidized, abundance of which decreased more significantly at high O2 concentrations. Such results were also observed in catalytic pyrolysis of guaiacol or vanillin. The benefit of using O2 was diminished formation of coke and/or precursors of coke over ZSM-5. Characterization of reaction intermediates in catalytic pyrolysis of lignin with in-situ IR showed that O2 presence remarkably decreased the abundance of aliphatic intermediates containing –OH, -C-H and C=O through oxidation reactions and also interrupted aromatization organics in both coke and biochar.