For several years it has been known that fungi and bacteria can attack and even liquefy low rank coals. This review covers the progress in coal biotechnology and microbiology, mainly during the last decade, from describing the first effects to elucidating the mechanisms used by the microorganisms. More than one mechanism is responsible for microbial coal degradation/liquefaction: oxidative enzymes (peroxidases, laccases), hydrolytic enzymes (esterases), alkaline metabolites and natural chelators. Due to the heterogeneous structure of coal, which is described in one section, and for economic reasons the review focuses on the enzymatic depolymerization of brown coal. Approaches which seem not so promising are discussed (anaerobic, reductive pathways, chemical pretreatment). Finally the possible applications and products in this field are summarized, as lignite with a worldwide production of about 940 million tons a year will continue to play an important economic role in the future.