Increasing environmental legislations on pollutant emissions originated from fossil fuel combustion and intention of increasing the life of existing fossil fuels give rise to the use of renewable sources. Biomass at this juncture, with its renewable nature and lower pollutant emission levels becomes an attractive energy resource. However, only seasonal availability of biomass and operation problems caused by high alkaline content of biomass ash restrict its combustion alone. These problems can be overcome by co-combustion of biomass with lignite. With its high fuel flexibility and high combustion efficiency, fluidized bed combustion is the most promising technology for co-firing. To improve and optimize the operation of co-firing systems a detailed understanding of co-combustion of coal and biomass is necessary, which can be achieved both with experiments and modeling studies. For this purpose, a comprehensive system model of fluidized bed combustor, previously developed and tested for prediction of combustion behaviour of fluidized bed combustors fired with lignite was extended to co-firing lignite with biomass by incorporating volatile release, char combustion and population balance for biomass. The model predictions were validated against experimental measurements taken on METU 0.3 MWt AFBC fired with lignite only, lignite with limestone addition and about 50/50 lignite/olive residue mixture with limestone addition. Predicted and measured temperatures and concentrations of gaseous species along the combustor were found to be in good agreement. Introduction of biomass to lignite was found to decrease SO2 emissions but did not affect NO emissions significantly.