The pore structure and oxygen-containing functional groups of lignite play an important role in drying behavior, spontaneous combustion characteristics, and other applications of lignite. In this paper, Zhaotong lignite was modified by steam explosion (SE) technology. The changes in pore structure and fractal characteristics were analyzed by mercury intrusion porosimetry (MIP). The effect of SE modification on surface oxygen-containing functional groups was studied by Fourier transform infrared spectroscopy. Finally, the relationships between the water adsorption capacity of modified lignite and pore structure or oxygen-containing functional groups were investigated. The results indicated that the macroporous and mesoporous pore volumes of modified lignite can be increased to the greatest extent by SE modification at 130 degrees C. For transition pores and micropores, the maximum pore volume can be obtained by SE modification at 230 degrees C. The irregularity of the pore structure surface of modified lignite can be increased by SE modification. In particular, the surface of all porous structures can be destroyed to the greatest extent by SE modification at 230 degrees C. Oxygen-containing functional groups in Zhaotong lignite can be effectively removed by SE modification, and the removal amount is positively correlated with the temperature of SE modification. Moreover, the decrease in monolayer water adsorbed on the modified lignite surface is due to the reduction in the number of oxygen-containing functional groups on the surface after SE modification. The pore volume of modified lignite is increased by SE modification, which clearly increases the amount of capillary water adsorbed by the modified lignite.