Xylite, a by-product of lignite production, can be converted into fuel pellets by using a wet pelletizing process, in which the drying step of the raw pellets is of vital importance. During moisture removal, structural changes take place in the agglomerates, they become harder and investigations of the drying behavior indicate high shrinkage during drying. This effect can also be seen in hygroscopic sorption experiments. Furthermore, the pellets show two drying sections. The main factor affecting the drying speed is the temperature; the pellet composition has a subsidiary effect.