Coal conversion in arc plasma with an initial temperature of 3700 K is complex; a new conversion mechanism is put forward in this article. The functions of pyrolysis and the interaction of active species containing plasma jets are the main factors for coal conversion under these conditions. This study indicates that when the coal feed rate is lower than 2.0 g/s, both pyrolysis and active species have evident contribution to coal conversion; the pyrolysis controls the coal conversion and the function of active species is very weak. It is also found that the coal feed rate has a large influence on coal conversion and the production of gas components.