Abstract: Water soluble bimetallic catalysts, derived from FeSO4·7H2O and ammonium heptamolybdate(AHM), were used for upgrading Kelamayi AR at an initial H2 pressure of 7.0MPa, 436 ℃, for 1 h. No coking (toluene insolubles <1%), and high yield of the distillates (<450 ℃, about 60%) show that the catalyst has a high activity in inhibiting coking and hydrocracking. To treat Kelamayi AR, the best concentrations of Mo and Fe are 15 μg/g～25 μg/g and 1100μg/g～1300μg/g in the studied range. The catalysts were characterized by XPS, XRD and TEM and it was confirmed that metals are present as metallic sulfides. Molybdenum is more difficult in sulfuration reaction than iron, thus the sulfuration conversion of Molybdenum is less than 50%. The nature of reciprocity between components of the bimetallic catalysts is “physiochemical-dispersion”, which can inhibit the crystal growing up each other. Compared with oil-soluble catalysts, the grain of water-soluble catalysts (100 nm) after sulfuration reaction is large, but smaller than monometal catalyst. As may be the result of inhibiting the crystal growing.