A technique is described for the application of MoS2 to coal particles. The method was used to determine the importance of several parameters to the performance of this direct coal liquefaction catalyst. Improved performance was obtained when MoS2 was intercalated with lithium, then exfoliated in a mixture of tetrahydrofuran and water in the presence of coal. Performance was compared by subjecting dried coal/catalyst mixtures to uniform microautoclave Liquefaction tests. Measurements of coal conversion and hydrogen consumption show that a combination of reduction of the MoS2 stacking and improved coal/catalyst dispersion is beneficial.