Chemical looping combustion is the indirect combustion by use of oxygen carrier.It can be used for CO2 capture in power generating processes. In this paper,chemical looping combustion of coal in interconnected fluidized beds with inherent separation of CO2 is proposed. It consists of a high velocity fluidized bed as an air reactor in which oxygen carrier is oxidized, a cyclone, and a bubbling fluidized bed as a fuel reactor in which oxygen carrier is reduced by direct and indirect reactions with coal. The air reactor is connected to the fuel reactor through the cyclone. To raise the high carbon conversion efficiency and separate oxygen carrier particle from ash, coal slurry instead of coal particle is introduced into the bottom of the bubbling fluidized bed. Coal gasification and the reduction of oxygen carrier with the water gas take place simultaneously in the fuel reactor. The flue gas from the fuel reactor is CO2 and water. Almost pure CO2 could be obtained after the condensation of water. The reduced oxygen carrier is then returned back to the air reactor, where it is oxidized with air. Thermodyanmics analysis indicates that NiO/Ni oxygen carrier is the optimal one for chemical looping combustion of coal.Simulation of the processes for chemical looping combustion of coal, including coal gasification and reduction of oxygen carrier, is carried out with Aspen Plus software. The effects of air reactor temperature, fuel reactor temperature, and ratio of water to coal on the composition of fuel gas, recirculation of oxygen carrier particles, etc., are discussed. Some useful results are achieved. The suitable temperature of air reactor should be between 1050-1150Cand the optimal temperature of the fuel reactor be between 900-950℃.