The effect of recycling the aqueous phase in a continuous hydrothermal liquefaction process was investigated in terms of product yield distribution, carbon balance, and composition of all main fractions. Using a custom-built continuous reactor system, a long-term experiment was conducted at 350°C and 250 bar with a feedstock of dried distiller’s grains with solubles. In two consecutive recycle experiments, the aqueous phase of the preceding experiment was used as dispersion medium for the feedstock preparation. In these recycle-experiments a significant increase in bio-crude yields was observed with a maximum increase in the first recycle experiment. However, the recycling of the aqueous phase also resulted in lower heating values and higher water contents in the oil fraction. Based on these findings, recycling the aqueous phase is a trade-off between improved yields and reduced burn qualities of the bio-crude. That said, recycling also lowers carbon discharge to the aqueous fraction, which may contribute significantly to reducing the environmental footprint of an industrial HTL-plant.