Our recent studies of the application of iron-based oxide catalysts to upgrading of heavy oils under sub-/supercritical water conditions are reviewed. The effect of reaction parameters on the product yields were investigated for the reaction of bitumen over iron-based oxide catalyst. Reaction pressure greatly affected the product yield, indicating that formation of carbonaceous solid product, called coke, decreased with increase in pressure, and the yield of lighter component (Gas Oil and VGO) was the highest under sub-critical water conditions using both batch and flow type reactors. Kinetic analysis and reaction paths for the decomposition of bitumen were investigated. The decomposition reaction of VR (vacuum residual oil) in bitumen was assumed as second order kinetics, and the activation energy was calculated as 132 kJ/mol. Reaction kinetics were analyzed in details using the Lumping Model. The assigned reaction rate constant for each lump revealed that VR was consecutively converted into VGO, Gas Oil, and Gas, and coke formation was suppressed under sub-critical water conditions, as compared with the main reaction path. Therefore, the reaction process using iron-based oxide catalyst can be applied for the on-site upgrading of heavy oil including bitumen derived from the SAGD (Steam Assisted Gravity Drainage) method, in which bitumen is mined with water under high temperature and pressure.