This work adopts a water-in-oil (w/o) microemulsion method for the in situ preparation of ultradispersed metallic nickel (Ni-0) nanocatalyst in heavy oil and assesses its hydrocracking activity. Catalyst preparation involved reducing Ni2+ added to the water pools of the heavy oil matrix in the form of aqueous Ni(NO3)(2) solution using hydrazine. The volume of the aqueous precursors was limited to values which corresponded to visually stable single heavy oil phase. The product particles were collected by addition of toluene and characterized using XRD, TEM, and EDX. These techniques confirmed the formation of nickel nanoparticles of 22 +/- 5 nm mean diameter. The hydrocracking activity of the as-prepared ultradispersed catalyst was evaluated using a semibatch reactor setup under 110 bar of hydrogen and 370 degrees C. Although no presulfiding was performed, XRD of the spent catalyst confirmed the formation of Ni3S2 nanoparticles with a mean particle size of the same range as the Ni-0 particles. Results showed 2-fold improvement in the gaseous fractions, around 47% conversion of the residue, more than 70% reduction in the resins, around 50% reduction in the asphaltenes and an increase in aromatics and saturates in the presence of the ultradispersed catalyst.