This work presents experimental results and modeling of the combustion chemistry of the oxy-fuel (O-2/CO2 recycle) combustion process with a focus on the difference in NO formation between oxy-fired and air-fired conditions. Measurements were carried out in a 100 kW test unit, designed for oxy-fuel combustion with flue gas recycling. Gas concentration and temperature profiles in the furnace were measured during combustion of lignite. The tests comprise a reference test in air and three oxy-fuel cases with different oxygen fractions in the recycled feed gas. With the burner settings used, lignite oxy-combustion with a global oxygen fraction of 25 vol % in the feed gas results in flame temperatures close to those of air-firing. Similar to previous work, the NO emission [mg/MJ] during oxy-fuel operation is reduced to less than 30% of that of air-firing. Modeling shows that this reduction is caused by increased destruction of formed and recycled NO. The reverse Zeldovich mechanism was investigated by detailed modeling and was shown to significantly reduce NO at high temperature, given that the nitrogen content is low (low air leakage) and that the residence time is sufficient.