The reaction of NO with char-bound nitrogen was studied using four model structures to represent the nitrogen left with the char when coal is devolatilized. The calculations were carried out to simulate combustion conditions resulting in the absence and presence of preadsorbed oxygen on the char. Density Functional theory at the B3LYP/6-31G(d) level was used to optimize the geometries of reactants, NO adsorption complexes, and products. Schematic energy profiles for each reaction were obtained in order to elucidate mechanisms for N2O evolution. We found that the NO molecule reacts with char-containing nitrogen to release predominantly N2 and CO to the gas phase. For the model char structures studied, the presence of adsorbed oxygen on the char-containing nitrogen enhances the reduction of the NO molecule to N2 as a predominant product of the reaction, but N2O can also be released as a minor nitrogen product.