The Toe-to-Heel Air Injection (THAI) combined with catalytic upgrading process in situ (CAPRI) has demonstrated it can simultaneously extract and upgrade heavy oil in situ. This paper reports the investigation of augmenting temperature deficit and suppressing coke formation in the CAPRI section through the incorporation of induction heating and H-donor solvents. An induction-heated catalytic reactor was designed and developed, heated with steel balls in a mixed bed of NiMo/Al2O3 catalyst (66% v/v) to 425 °C temperature, 15 bar pressure and 0.75 h−1 LHSV (Liquid Hourly Space Velocity). The catalyst surface area, pore volume and pore size distribution were determined by using nitrogen adsorption–desorption, while the location of coke deposits within the microstructure of the pelleted spent catalyst was analyzed with X-ray nano-Computed Tomography (X-ray nano-CT). Findings showed that induction heating improved the catalyst performance, resulting in a 2.2° American Petroleum Institute (API) gravity increase of the upgraded oil over that achieved with the conventional heating method. The increment in API gravity and viscosity reduction in the upgraded oils with nitrogen gas only, N2 and H-donor solvents, and hydrogen gas environments can be summarized as follows: decalin > H2 gas >= tetralin > N2 gas. Meanwhile, the improvement in naphtha fraction, middle distillate fractions and suppression of coke formation are as follows: decalin > H2 gas > tetralin > N2 gas. The X-ray nano-CT of the spent catalyst revealed that the pellet suffers deactivation due to coke deposit at the external surface and pore-mouth blockage, signifying underutilization of the catalyst interior surface area.