Coal can react directly with hydrogen to cleave C–C bonds and remove heteroatoms (O, N and S), which is referred to as “direct liquefaction”. Such processes are catalyzed and involve more than one stage and generate distillates in high yield. Alternatively, coal can be gasified with steam into a mixture of carbon monoxide and hydrogen, known as synthesis gas or “syngas”, which then can be converted with suitable catalysts into a wide variety of fuels and chemical feedstocks by what is commonly referred to as Fischer–Tropsch or FT synthesis. This route is known as “indirect liquefaction”, which is mature in the sense that commercial plants are currently operating using this process, notably the SASOL process in South Africa. This contrasts with direct liquefaction where, despite the intensive process development that has occurred with a number of demonstration plants being operated, high capital costs and current low oil prices have prevented commercial plants coming into operation using this process, with the exception of the Shenhua plant in China. Despite the uncertain outlook, a major development programme since the 1970s, triggered by rapid increases in oil prices, has led to the severity of the process conditions being reduced considerably and a much greater understanding of the underlying chemistry has been gained, which provides the main focus for this overview. The impact of coal structure, solvent composition and catalysis on the conversion of coal to liquids is described, together with the chemical nature of the heavy intermediates and final distillate products.