We have used controlled atmosphere electron microscopy in conjunction with in situ electron diffraction in an attempt to learn more about the fundamental aspects of iron-based catalyst particles used in coal liquefaction processes. This paper is devoted to a discussion of how the information derived from in situ electron microscopy examinations can be used to gain a unique insight into some of the factors which govern the behavior of small catalyst particles. In this context, such features as the morphological characteristics of the particles, catalyst deactivation phenomena, and changes in the chemical nature of the particle as a function of reaction conditions are stressed. Attention is also given to methods by which the activity of metal particles can be modified by incorporation of selected adatoms into the surface or pretreatment of the catalyst in certain gas environments. Emphasis is also placed on the necessity to perform a suitable passivation step if one is to maintain chemical integrity of a catalyst sample after exposure to a reducing environment.