Hydrothermal liquefaction (HTL) is a promising thermochemical process to treat wet feedstocks and convert them to chemicals and fuels. In this study, the effects of final temperature (300, 325, and 350 °C), reaction time (30 and 60 min), rice-straw-to-water ratio (1:1, 1:5, 1:10, and 1:15 (wt./wt.)), methanol-to-water ratio (0:100, 25:75, 50:50, and 75:25 (vol.%/vol.%)), and alkali catalysts (KOH, NaOH, and K2CO3) on product yields, composition of bio-crude, higher heating value (HHV) of bio-crude and bio-char, and energy recovery on HTL of rice straw are investigated. At the optimal processing condition corresponding to the final temperature of 300 °C, 60 min reaction time, and rice-straw-to-water ratio of 1:10 at a final pressure of 18 MPa, the bio-crude yield was 12.3 wt.% with low oxygen content (14.2 wt.%), high HHV (35.3 MJ/kg), and good energy recovery (36%). The addition of methanol as co-solvent to water at 50:50 vol.%/vol.% improved the yield of bio-crude up to 36.8 wt.%. The selectivity to phenolic compounds was high (49%−58%) when only water was used as the solvent, while the addition of methanol reduced the selectivity to phenolics (13%−22%), and improved the selectivity to methyl esters (51%−73%), possibly due to esterification reactions. The addition of KOH further improved the yield of bio-crude to 40 wt.% in an equal composition of methanol:water at the optimal condition. The energy-consumption ratio was less than unity for the methanol and catalyst system, suggesting that the process is energetically feasible in the presence of a co-solvent.