In this experimental study, diverse water-soluble Fe(III) complexes were synthesized and employed to catalyze the aquathermolysis of heavy oil. A ternary reaction system comprising heavy oil, water, and methanol was established to facilitate the process. Viscometry, thermogravimetric analysis, DSC, and elemental analysis were utilized to thoroughly investigate the treated heavy oil. The findings reveal that, under optimal conditions of water, catalyst, and methanol dosage, the viscosity of heavy oil can be significantly reduced by up to 88.22% after reacting at 250 °C for 12 h. Notably, apart from viscosity reduction, the catalytic aquathermolysis also effectively removes heteroatoms such as sulfur, nitrogen, and oxygen, enabling in situ modification and viscosity reduction of heavy oil. This study demonstrates the potential of water-soluble Fe(III) complexes in enhancing the efficiency of heavy oil extraction and processing.