The dramatic increase in global energy demand and the imminent fossil fuel shortage are pushing for an increase of biomass utilization in distributed electricity generation and domestic heating. Worldwide, biomass ranks fourth as an energy resource, providing approximately 14% of the world’s energy needs following coal, oil and natural gas. In developing countries, biomass accounts for approximately 35% of the energy used. Currently a variety of biomass technologies have been developed, such as combustion, gasification and biochemical methods. Combustion is the most mature conversion technology utilized for biomass. Although biomass combustion releases some combustion pollutants, biomass is renewable and produces no net CO2 emission in combustion. Due to the low sulphur and low nitrogen contents of biomass, substituting biomass for fossil fuels (particularly coal) can reduce SO2 and NOX emissions. Biomass-fired combined heat and power (CHP) system is a great improvement of traditional biomass combustion utilization. This paper briefly reviews the biomass-fired power generation. State-of-the-art of biomass-fired organic Rankine cycle (ORC) combined heat and power systems are presented. Small-scaled domestic biomass-fired CHP (1-10 kWe) has a potential huge market, but has not been available on the commercial market. The authors of this paper are currently developing such kind of a CHP unit.