Abstract: Nanonickel catalyst was prepared in methylcyclohexanewater noctanolAEO9 microemulsion system, and used in the viscosity reduction process of Liaohe extraheavy oil by aquathermolysis. It is observed that the nanonickel could catalyze the aquathermolysis reaction of extraheavy oil at 280℃. The experimental results demonstrate that compared with the original crude oil sample, the mean molecular weight of the upgraded sample decreases, the content of sulfur changes from 0.45% to 0.23%, the content of resin and asphaltene reduces 15.83% and 15.33%, respectively. Based on the GC-MS analysis results, a reaction pathway is proposed that involves hydrogen transfer from methylcyclohexane to the extraheavy crude oil resulting in the formation of toluene. During the cooling process after upgrading reaction, the W/O emulsion is formed because of the presence of the surfactant AEO9. As a result, with respect to the original crude oil, the viscosity of upgraded sample is changed from 139800mPa·s to 2400mPa·s at 50℃, an approximately 98.90% reduction by the synergetic effects of upgrading, emulsification and diluting.