The Yangsanmu oilfield of Dagang is a typical heavy oil reservoir. After the maximum primary production (waterflooding), more than half of the original oil is still retained in the formation. Therefore, the implementation of an enhanced oil recovery (EOR) process to further raise the production scheme is inevitable. In this work, a novel in‐situ CO2 foam technique which can be used as a potential EOR technique in this oilfield was studied. A screening of gas producers, foam stabilizers and foaming agents was followed by the study of the properties of the in‐situ CO2 foam systems through static experiments. Core‐flooding experiments and field application were also conducted to evaluate the feasibility of this technique. The results indicated that the in‐situ CO2 foam system can improve both the sweep and displacement efficiencies, due to the capacity of this system in reducing oil viscosity and interfacial tension, respectively. The EOR performance of the in‐situ CO2 foam system is better than the single‐agent and even binary system (surfactant‐polymer) flooding. The filed data demonstrated that the in‐situ CO2 technique can significantly promote oil production and control water cuts. These results are believed to be beneficial in making EOR strategies for similar reservoirs.