The aim of this research is to understand the major function of iron-based catalysts on direct coal liquefaction (DCL). Pyrolysis and direct liquefaction of Shenhua bituminous coal were carried out to investigate the effect of three solvents (wash-oil from coal-tar, cycle-oil from coal liquefaction, and tetralin) in a N-2 or a H-2 atmosphere and with or without catalyst. The hydrogen content in the solvent and liquid product and the H-2 consumption for every run were calculated to understand the hydrogen transfer approach in DCL. The results showed that the iron-based catalyst promotes the coal pyrolysis, and the dominating function of the catalyst in DCL is to promote the formation of activated hydrogen and to accelerate the secondary distribution of H in the reaction system including the gas, liquid, and solid phases. The major transfer approach of the activated hydrogen is from molecular hydrogen to solvent and then from solvent to coal, and the solvent takes on the role of a "bridge" in the hydrogen transfer approach.