An integrated process of phase transfer nucleophilic substitution and coalescence is proposed to upgrade coal tar by simultaneously removing organochlorine compounds (OOCs) and water. For the phase transfer catalysts (PTCs) and nucleophiles, polyethylene glycol 400 (PEG‐400) and triethanolamine (TEOA) were the most effective to remove OOCs from coal tar. The optimal parameters of the dichlorination process in terms of molar ratio of PEG‐400 and TEOA to OOCs, reaction temperature, reaction time, and stirring speed were determined. The chloride removal efficiency reached 80.66 % when glass fiber was used for oil‐water coalescence separation. A promising method for simulllltaneously removing chloride and water from coal tar is provided.