A new method for liquefying coal using dielectric barrier discharge plasma has been studied. By utilizing waste oil as the solvent and processing coal nanopowder in the plasma for 10 min, we have attained a liquid yield of more than 80%. The experiment shows that not only the coal nanopowder promoted the liquefaction process, but hydrogen radicals improved the liquid yield effectively. In the plasma processing, the phenomenon of the changing color of the nanopowder solution and not producing a solid residue has been obviously observed. The rational parameters that affected the liquefaction of coal nanopowder have been achieved through the experiment, and the liquefied products have been analyzed.