The reaction mechanisms of tetralin as a model compound of heavy petroleum fractions were investigated with the aim of improving bifunctional USY zeolite-based catalysts for heavy-oil hydrocracking. The major reaction path in the initial period was found to differ from that later in the reaction. In the initial reaction period, over USY catalysts with and without NiW sulfide, the reaction began with the formation of phenylbutyltetralin from two tetralin molecules by electrophilic aromatic substitution. Phenylbutyltetralin subsequently decomposed into benzene and octahydro tricyclic aromatic compounds. These reactions were catalyzed without the involvement of gaseous hydrogen and very likely lead to coke formation by chain reactions. Later in the reaction, tetralin and the above-mentioned heavy compounds were gradually hydrocracked over the bifunctional USY-supported NiW catalyst. These results indicated that the hydrogen supply from NiW sulfide to the acid site was not fast enough to prevent retrogressive reactions of partially hydrogenated polycyclic aromatic compounds. It was inferred that a closer relationship between the active sites of hydrogenation and cracking was needed for the improvement of bifunctional catalysts in heavy-oil upgrading,