Devolatilization is an important step in fluidized bed combustion and gasification of coal. ‘Devolatilization’ is a general term that signifies the removal of volatile matters from the coal matrix. It is an extremely important step because the combustion of volatile matter can account for 50% of the specific energy of fluidized bed combustion of a high-volatile coal. Significant insights into the complex physicochemical phenomena that occur during devolatilization have been obtained in the recent years. This review focuses on the devolatilization of coal in an inert gas, air, and oxygen-enriched air, with emphasis on the effects of the operating parameters (e.g. temperature, heating rate, pressure, and gas velocity) on the yield of volatile matter. Particle size, oxygen content of the fluidizing gas, volatile content of coal and specific heat are some of the other important parameters for the devolatilization of coal. This review also explains the development and application of structural and empirical models. The structural models (e.g. FG-DVC and CPD models) are fairly complex. However, they can accurately predict the yields of gas and tar. It is observed from the review of the literature that the mechanism of coal devolatilization needs further study. Although the shrinking-core model can describe the devolatilization in the beginning and toward the end of the process, major deviations are often observed. The economic studies reveal that the capital cost of fluidized bed combustion reduces upon doubling the capacity. Some problems associated with bubbling fluidized bed combustion (e.g. the increase in freeboard temperature) have been explained with the present knowledge of devolatilization. Copyright © 2011 John Wiley & Sons, Ltd.