We developed an in situ synthesis strategy for preparing well-dispersed CuO nanoparticles as aquathermolysis catalyst for viscosity reduction in Shengli heavy oil (China). A Cu(OH)₂-contained microemulsion was employed as a carrier to disperse the precursor Cu(OH)₂ to the heavy oil phase. Under aquathermolysis condition (240 ℃, 2.5 MPa of N₂), the Cu(OH)₂ precursors would first be converted in situ to well-crystallized and size-homogeneous CuO nanoparticles naturally, catalyzed by which the viscosity of Shengli heavy oil could be reduced as much as 94.6%; simultaneously, 22.4% of asphaltenes were converted to light components. The agglomeration of the in situ prepared monoclinic CuO nanoparticles could be negligible throughout the catalytic reaction. Based on the characterization results of ¹H NMR, elemental analysis and GC–MS of oil samples before and after catalytic aquathermolysis, the mechanism for viscosity reduction of heavy oil in the catalytic system was investigated.