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Auto-thermal updraft gasification of biomass pellets in a packed bed reactor was conducted by using air and air–steam mixture. Air–steam gasification produced syngas with slightly improved lower heating value of 4.5 MJ/mN3 in comparison to 4.4 MJ/mN3 produced during air gasification. The corresponding tar generation for air gasification and air–steam gasification was 21.2 g/mN3 and 26.2 g/mN3, respectively. Cold gas efficiency for air gasification and air–steam gasification was realized to be 91% and 91.4%, respectively. Carbon conversion during air–steam gasification reached about 91.5% while carbon conversion during air gasification was limited to 84.3%.