Thermal CO pretreatment of Wyodak subbituminous coals from the Clovis Point and Black Thunder mines in aqueous media at 300 degrees C produces a water-insoluble product having a higher hydrogen content, lower oxygen content, higher volatility, and increased solubility in pyridine. Oxygen-rich, water-soluble organic acids are formed in the absence of CO or at low CO pressures. However, at 800 psig of CO, the water-soluble organic product is absent. Both coal hydrogenation and CO conversion were examined in the presence of added OH-, CO(3)(2-)and HCO3-. CO conversion is related to formation of formate in the aqueous phase and the generation of CO2 and H-2. Chemical, thermogravimetric, and optical microscopic data of the pretreated material indicate major modification of the coal structure during pretreatment. Liquefaction of the pretreated material at 400 degrees C in hydrogen/tetralin with or without catalysts (Fe and Ni-Mo) indicates that pretreatment gives higher conversion and, in most cases, higher oil yields and lower hydrogen consumption than with the untreated coal.