Increasing costs and declining reserves of petroleum are forcing oil importing countries to develop alternate energy sources. The direct liquefaction of coal is currently being investigated as a viable means of producing substitute liquid fuels. The coal liquids derived from such processes are typically high in nitrogen, oxygen and sulfur besides having a high aromatic and metals content. It is therefore envisaged that modifications to existing petroleum refining technology will be necessary in order to economically upgrade coal liquids. In this review, compositional data for various coal liquids are presented and compared with those for petroleum fuels. Studies reported on the stability of coal liquids are discussed. The feasibility of processing blends of coal liquids with petroleum feedstocks in existing refineries is evaluated. The chemistry of hydroprocessing is discussed through kinetic and mechanistic studies using compounds which are commonly detected in coal liquids. The pros and cons of using conventional petroleum refining catalysts for upgrading coal liquids are discussed.