A method is provided for removing ammonia from the sour water stream of a coal gasification process. The basic steps comprise stripping the ammonia from the sour water; heating the stripped ammonia to a temperature from between 400.degree. to 1,000.degree. F; passing the gaseous ammonia through a reactor containing a sulfided catalyst to produce elemental hydrogen and nitrogen; and scrubbing the reaction product to obtain an ammonia-free gas. The residual equilibrium ammonia produced by the reactor is recycled into the stripper. The ammonia-free gas may be advantageously treated in a Claus process to recover elemental sulfur. Iron sulfide or cobalt molybdenum sulfide catalysts are used.