The coal gasification mechanism in a steam medium under arc plasma conditions was investigated at atmospheric pressure in a tube-type setup. The gases obtained were analysed by gas chromatography. The active species in the plasma were monitored and analysed in situ by optical emission spectroscopy (OES). The effects of operating parameters such as the current in the electromagnetic coil and the flow rate of carrier gas (air) on the gas yields as well as on the emission intensities of the active species were studied. The quantitative emission intensities of the active species are correlated with the yields of main components in the gas products. The results show that as the current in the electromagnetic coil increases, the yields of H2, CO, CO2 and O2 as well as the peak intensities of C atom, H atom, CH radical and CO+ion detected by OES pass through a maximum. It is also found that as the flow rate of carrier gas (air) increases, the yields of CO, CO2 and O2 increase; at the same time, the yield of H2 and the peak intensities of C atoms, H atoms, CH radicals and OH radicals decrease. The presence of C atoms or H atoms in the reaction system favours the formation of H2, which is evidenced by the fact that the yield of H2 increases as the optical emission intensity of C atom or H atom species increases. Based on the experimental results, a possible mechanism of coal gasification in steam medium under plasma conditions is proposed and discussed.