A two-stage process for producing acetylene and calcium chloride from calcium carbide and water has two successive reaction steps. In step Number 1, calcium carbide is charged into an entrained flow-type reactor vessel containing water. The reaction which follows proceeds to about 60-90% completion. The entrained reaction products and the unreacted feed material are carried over to a secondary reactor to complete the reaction, and the acetylene gas is drawn off. Calcium hydroxide product is removed from the reactor and reacted with hydrogen chloride to form calcium chloride. Heat generated by the exothermic reactions of water with calcium carbide and HCl with calcium hydroxide is used to dry the calcium chloride product and improve its value. In the presence of excess water, the calcium carbide-water reaction is effectively a first order, irreversible reaction.