Drying and oxidation of Wyodak subbituminous coal at 100-150 degrees C have been shown to have significant effects on its structure and on its catalytic and noncatalytic low-severity liquefaction at 350 degrees C for 30 min under 6.9 MPa of H-2. Spectroscopic analyses using solid-state C-13 NMR, pyrolysis-GC-MS, and FT-IR revealed that oxidative drying at 100-150 degrees C causes the transformation of phenolics and catechol into other related structures (presumably via condensation) and high-severity air drying at 150 degrees C for 20 h leads to disappearance of catechol-like structure. Increasing air drying time or temperature increases oxidation to form more oxygen functional groups at the expense of aliphatic carbons. For noncatalytic liquefaction at 350 degrees C, raw coal gave higher conversion and oil yield than the dried coals, regardless of the solvent. Compared to the vacuum-dried coal, the coal dried in air at 100 degrees C gave a better conversion in the presence of either a hydrogen-donor tetralin or a nondonor l-methylnaphthalene (1-MN) solvent, Catalytic runs were performed using impregnated ammonium tetrathiomolybdate (ATTM) precursor. In the presence of either-tetralin or 1-MN, however, the runs using ATTM impregnated on air-dried coal (dried at 100 degrees C for 2 h) afford better-conversions and oil yields than using vacuum-dried coal. Upon drying in air at 150 degrees C for 20 h, the conversion of air-dried coal decreased to a value significantly lower than that of the vacuum-dried coal in both the thermal and catalytic runs at 350 degrees C. Such a clearly negative impact of severe oxidation is considered to arise from significantly increased oxygen functionality which enhances the cross-link formation in the early stage of coal liquefaction. Physical, chemical, and surface physicochemical aspects of drying and oxidation and the role of water are also discussed.