Modeling of hydrodynamics, mass/heat transfer and chemical reactions with bubbly flow in a pilot slurry internal airlift loop reactor (IALR) for the process of direct coal liquefaction (DCL) under the conditions of elevated pressure and high temperature is performed with a steady two fluid model. A modified numerical method for multiphase flow and the developed boundary conditions to promote the convergence of steady solutions are also proposed. The results show that the predicted average gas voidage, average liquid velocity and temperature at two locations in the riser agree reasonably well with experimental data. The snapshots of temperature and concentrations of the reactants in respective phases and the product in slurry are all well captured. The models and numerical procedure developed in this work can be used as an effective tool for design and scale-up of IALRs for the DCL process. (C) 2015 Elsevier Ltd. All rights reserved.