A method for desulfurization and oxidation of carbonaceous fuels including a two stage oxidation technique. The carbonaceous fuel, along with an oxygen-containing gas is introduced into a first stage partial oxidation unit containing molten slag maintained at a temperature of about 2200.degree.-2600.degree. F. A flux may also be introduced into the first stage partial oxidation unit for the purpose of maintaining the viscosity of the molten slag at a value no greater than about 10 poise. The carbonaceous fuel is gasified, and sulfur is chemically bound and captured in the molten slag. The combustible gas derived from partial oxidation and gasification is directed along a substantially horizontal path to a second stage oxidation unit for final combustion. The sulfur-containing slag is removed to a water-sealed quench system for disposal.