From the viewpoint of reaction engineering, this study compared the characteristics of existing coal pyrolysis technologies to tar and gas products, summarized the effect of heat and mass transfer in the key steps of coal pyrolysis process on volatiles, such as intra-particle generation and release, inter-particle diffusion and residence in the reactor, analyzed the effect of secondary reactions on products quality, and finally revealed the root of low yield, poor quality and high dust content in the target products of the existing coal pyrolysis technologies. On this basis, the effective measures of coal directional pyrolysis were proposed, including high temperature heating and fast heat transfer in the volatiles generation and char poly-condensation, tar reforming and dust filtering in the char bed during volatiles release, and directional overflow of volatiles by setting up gas channels in the reactor. Then, the technology of coal directional pyrolysis by a moving bed with internals developed by the research group was introduced. The adopted internals included heat transfer plate and gas collection cavity, by which the heat and mass transfer was intensified, the direction of gas flow in reactor was guided orderly and dust was filtered by the slowly moving char bed. With respect to this pyrolysis technology, the fundamental research in a pyrolysis equipment with a processing capacity (PC) of 1—5 kg/time, the model test on a pyrolysis equipment with a PC of 100 kg/time, and a pilot demonstration on a plant with a PC of 1000 t/a have been conducted. The results fully confirm the advantages of this pyrolysis technology in the simultaneous improvement of yield and quality for both of tar and pyrolysis gas, the reduction of dust content in oil, the good adaptability of crushed coal feedstock. Based on the above research, the internal component directional pyrolysis technology and the heat/electricity-oil-gas co-generation technology based on this technology have been formed.