The resources of tar-rich coal in Western China are abundant and are available for large-scale development. Understanding the oil and gas resource properties of tar-rich coal and promoting the development and transformation of tar-rich coal to produce oil and gas are crucial for increasing domestic oil and gas supply, relieving external dependence on oil and gas, and ensuring national energy security of China. This study estimated the potential of tar-rich coal resources in Western China based on the current exploration results of coal resources, reviewed the current status and existing problems, and proposed the basic concept and technical conception for the development and utilization of tar-rich coal in Western China considering the new requirements for carbon reduction, intelligent green development, and compensation for oil and gas shortage. The study concluded that the development and utilization of tar-rich coal needs to focus on key technologies, including high-precision comprehensive exploration, high-recovery-rate mining, underground in-situ pyrolysis, pyrolysis and gasification integration, and in-situ pyrolysis char CO2 storage. Furthermore, we suggest that the tar-rich coal should be included in the management of unconventional oil and gas resources, scientific and technological research on the development and utilization of tar-rich coal should be strengthened, a national demonstration area should be established, and development of new energy and tar-rich coal in Western China should be coordinated, so as to maximize the special advantages of tar-rich coal as coal-based oil and gas resources and realize the low-carbon and high-value utilization of coal resources.