The unburned carbon loss in fly ash of circulating fluidized bed (CFB) boilers, most of which are burning active fuels such as lignite or peat, is normally very low. However, most CFB boilers in China usually burn hard coals such as anthracite and bituminous coal and coal wastes, so the carbon content in the fly ash from these boilers is higher than expected. This paper investigates the source of unburned carbon in the fly ash of CFB boilers burning hard coal through a series of field tests and laboratory investigations. The char behavior during combustion, including fragmentation and deactivation, which is related to the parent coal, has an important impact on the carbon burnout in CFB boilers. The research shows that char deactivation occurs during char burnout in fluidized bed combustion, especially for large particles of low rank coal. The uneven mixing of solids and air in the core region of the furnace also causes poor burnout of carbon in CFB fly ash. An index describing the volatile content (as dry ash free basis) over the heating value is proposed to present the coal rank. The coal combustion efficiency is shown to be strongly connected with this coal index. Several changes in the CFB boiler design are suggested to reduce the unburned carbon loss in the fly ash.