Results of a study conducted to convert coal to C-2-C-4 hydrocarbons in a two-stage reactor system are presented. Coal was converted to liquids at 440 degrees C in a stirred batch autoclave using tetralin as the hydrogen donor solvent. The liquids produced were separated from the unreacted coal and ash by filtration. The liquids were then fed into a second stage fixed bed reactor containing sulfided NiMo/Al2O3 and SiO2-Al2O3 catalyst. The liquids were hydrocracked on the dual-functional catalyst giving high yields of C-2-C-4 hydrocarbons. The pressure was 1800 psig and the temperatures were in the range of 425 to 500 degrees C. Reaction mechanisms of conversion of coal derived liquids to C-2-C-4 hydrocarbons are presented. The kinetic parameters of the conversion of coal liquids to gases were determined. The activation energy was determined to be 23.9 Kcal/mol. Cracking reactions involving C-C bonds appear to be late-controlling.