Substandard fuel properties and high sulfur levels remained bottlenecks for the utilization of biomass and low-grade coal for energy generation. This work systematically studied the synergistic effects of co-hydrothermal carbonization (co-HTC) of watermelon peel (WP) and high-sulfur coal using process-derived organic acids. Fuel properties, desulfurization efficiency, and combustion behaviors of co-HTC derived hydrochars and fuel blends of WP hydrochar and coal prepared by the typical post-hydrothermal carbonization (HTC) blending technique were compared. The physical and chemical compositions of WP/coal hydrochars were investigated to evaluate their corresponding fuel properties. In addition, flame characteristics were studied via single pellet combustion, while the chemical compositions of residual HTC process water were examined by gas-chromatography mass spectroscopy. Note-worthily, the co-HTC derived hydrochars were characterized by higher heating values in the range of 27.3–28.8 MJ/kg and fuel ratios of 2.67–6.95. HC-3:7, HC-5:5 and HC-7:3 showed higher desulfurization efficiencies (57.9–77.7%) compared to the post-HTC blending method (8.5–33.5%). Moreover, the co-HTC derived hydrochars exhibited lower post-combustion ash contents (8.8–12.0%) compared to CC-3:7 (17.3%), CC-5:5 (17.9%) and CC-7:3 (10.5%). Remarkably, HC-5:5 demonstrated the strongest synergistic effect of 70%. The flame observation results indicated that co-HTC derived hydrochars exhibited more stable combustion flames than the post-treatment blended samples. Hence, co-HTC provides a low-cost and eco-friendly approach for converting WP and high-sulfur coal into cleaner solid fuel.