Serbia is one of the countries of Southeastern Europe with significant potentials for using biomass from forests and wood processing industry in the form of wood residues for the production of modern fuels. This type of biomass has not been used efficiently. One of the reasons is the traditional use of firewood for domestic heating needs despite its lower energy efficiency compared to pellets and briquettes. According to FAO methodology, the estimated energy potential of the available biomass derived from forests and wood processing industry in Serbia amounts to 1.53 Mtoe/year. According to the Energy Sector Development Strategy of the Republic of Serbia for the period by 2025 with projections by 2030 together with relevant Decisions on the energy balance determination, the degree of the use of potentially available biomass from forests and wood processing industry is around 1.02 Mtoe/year (66.7%). The remaining unused potential of this biomass is estimated at around 0.51Mtoe / year. Besides the study of the state of biomass from forests and wood processing industry, the paper provides recommendations on how to increase the utilization rate of this biomass in Serbia.