In this study, we demonstrated the use of plasma electrolysis as a low-energy, efficient method of producing biobased chemicals from cellulose. We used high-voltage alternative current electricity as the plasma source in polar aprotic solvents to achieve complete liquefaction of cellulose without the use of external heating. A levoglucosenone yield of 43% was obtained after 15 min of conversion in γ-valerolactone using a voltage of 6 kV and frequency of 6 kHz, and a 38% yield was obtained within 3 min in sulfolane using a voltage of 4 kV (or 40% after treating for 7 min with the voltage of 3.5 kV). Compared to conventional liquefaction in the same solvents, plasma electrolysis could produce much greater LGO yields using significantly less energy. In this study, the plasma electrolysis of cellulose in γ-valerolactone was able to increase the levoglucosenone yield by 154% while using only 28% of the energy consumed during conventional thermal-based conversion of cellulose in the same solvent for producing its maximum yield of 17%. When the same conversions were performed in sulfolane, a 28% higher levoglucosenone yield was produced while requiring only 3% of the energy consumed during the respective thermal-based conversion of cellulose to obtain its maximum yield of 31.2%. The study also revealed that the plasma electrolysis of cellulose proceeds through novel radical-based mechanisms involving in situ-generated hydrogen radicals, by which cellulose depolymerizes and dehydrates much more efficiently than it does during conventional liquefaction. During the plasma electrolysis process, cellulose conversion was significantly enhanced by synergistic effects between Joule heating and plasma chemistry.