Abstract: An improved coal liquefaction process is disclosed wherein subdivided coal is substantially dissolved in a petroleum-derived solvent in the presence of added hydrogen in a non-catalytic dissolving stage at a temperature in the range 400.degree.-480.degree. C., thereby forming a mixture of dissolved coal, solvent and insoluble solids. The effluent mixture of solvent, dissolved coal and insoluble solids from the dissolver is contacted with a hydrocracking catalyst under hydrocracking conditions at a reduced temperature below 425.degree. C., resulting in a product having a normally liquid portion which may be used directly as a low-sulfur, low-nitrogen fuel oil.