A process for reducing the sulfur and ash content of coal wherein coal particles are treated with a conditioning agent in an aqueous slurry prior to agglomeration with a minor amount of hydrocarbon oil. After separation of the coal-oil agglomerate from ash and mineral matter remaining in the aqueous slurry, additional oil is added to provide a slurry of coal particles in hydrocarbon oil. Agglomeration of remaining ash and mineral matter is effected by addition of a minor amount of water. After separation of the mineral agglomerate and recovery from the oil slurry, treated coal particles are substantially reduced in ash and sulfur content.