The use of pulverized coal as a fuel for diesel engines can be a practical and efficient means of substituting coal for oil and gas in medium size applications such as railroad locomotives, ships and industrial stationary and co-generation power. These applications could result in reducing the oil and gas consumption of the U.S. by 2% to 10%, depending on the market penetration. The extensive German development of the use of pulverized coal in diesels during the period 1930 to 1944 demonstrated that coal-fueled diesels can be a practical heat engine. Although the German development used dry pulverized coal as a fuel, it now appears that beneficiated coal-water slurries will be a more practical and economical form of fuel. Operation on coal-water slurries is likely to pose some problems with ignition and particle agglomeration which require investigation. In this paper the background on coal-fueled diesel engines is reviewed and the potential applications and benefits are briefly presented. The technical problems in developing a coal-water slurry diesel are reviewed and possibilities for overcoming these problems are presented and discussed. A coal-fueled diesel research and development program is recommended.