Abstract: An improved process for the liquefaction of solid carbonaceous materials wherein a solvent or diluent derived from the solid carbonaceous material being liquefied is used to form a slurry of the solid carbonaceous material and wherein the solvent or diluent comprises from about 65 to about 85 wt. % hydroaromatic components. The solvent is prepared by first separating a solvent or diluent distillate fraction from the liquefaction product, subjecting this distillate fraction to hydrogenation and then extracting the naphthenic components from the hydrogenated product. The extracted naphthenic components are then dehydrogenated and hydrotreated to produce additional hydroaromatic components. These components are combined with the solvent or diluent distillate fraction. The solvent may also contain hydroaromatic constituents prepared by extracting naphthenic components from a heavy naphtha, dehydrogenating the same and then hydrotreating the dehydrogenated product.