To reveal the effect mechanism of CO atmosphere on coal pyrolysis, a study on raw and demineralized lignite was carried out in a horizontal tube furnace under N-2 and CO/N-2 atmosphere. CO had a negligible effect on the char yield at low temperatures, whereas it enhances the char yield at temperatures higher than 550 degrees C. The release of tar was higher in the presence of CO above 450 degrees C because of more free radicals, which reduced low-temperature crosslinking, and higher selectivity of hydroxyl groups to phenols in the CO-containing atmosphere. The yields of CO2 and H-2 increased, water and CO yields decreased under CO/N-2 atmosphere. Light hydrocarbon gases were not affected by changing the reaction atmosphere. The difference between product yields from raw and demineralized coal confirmed that the catalysis of inherent minerals had a great catalytic effect on the water-gas shift reaction and Boudouard reaction.