The main objective of this work(+) was to convert aromatic compounds, representative of coal-derived liquids, into high octane compounds low in aromatics. For this study, 1-methylnaphthalene was chosen as a model compound. Experiments were performed in single and two-stage systems. The model compound was treated with various catalysts at different reaction conditions in the single-stage operation. The highest conversion to isoparaffins and substituted cyclohexanes and cyclopentanes, 40.1% was achieved with a NiW/SiO2-Al2O3 catalyst at 325 degrees C and 1000psig in 10 h with a feed to catalyst ratio of 10 to 1. In the two-stage operation, 1-methylnaphthalene was hydrogenated to methyldecalins at 325 degrees C with almost 100% conversion in the first stage, using a NiMo/TiO2-Al2O3 catalyst. In the second stage, the methyldecalins underwent hydrocracking reactions at different reaction conditions using various catalysts. Pd/REX exhibited the best result for the production of high octane gasoline components without aromatics at 300-325 degrees C.