A coal hydrogenation and liquefaction process in which particulate coal feed is pressurized to an intermediate pressure of at least 500 psig and slurried with CO.sub.2 liquid to provide a flowable coal/CO.sub.2 slurry feedstream, which is further pressurized to at least 1000 psig and fed into a catalytic reactor. The coal particle size is 50-375 mesh (U.S. Sieve Series) and provides 50-80 W % coal in the coal/CO.sub.2 slurry feedstream. Catalytic reaction conditions are maintained at 650.degree.-850.degree. F. temperature, 1000-4000 psig hydrogen partial pressure and coal feed rate of 10-100 lb coal/hr ft.sup.3 reactor volume to produce hydrocarbon gas and liquid products. The hydrogen and CO.sub.2 are recovered from the reactor effluent gaseous fraction, hydrogen is recycled to the catalytic reactor, and CO.sub.2 is liquefied and recycled to the coal slurrying step. If desired, two catalytic reaction stages close coupled together in series relation can be used. The process advantageously minimizes the recycle and processing of excess hydrocarbon liquid previously needed for slurrying the coal feed to the reactor(s).