The cavitation technique with the use of a proper hydrogen donor can be used to upgrade heavy oils, such as atmospheric and vacuum residues and lower the difficulties of their transportation and exploitation. On the other hand, the very high localized temperature experienced in collapsing bubbles may activate the dispersed metal nanoparticles, and therefore the cracking or hydrogenation reactions may be catalyzed through the cavitation process of heavy oils. This paper investigated numerically the formation of a vapour phase in the cavitation chamber of a home-made laboratory hydrodynamic cavitation setup and also investigated the upgrading of a sample of heavy fuel oil in the presence of gasoline as a hydrogen donor and metal nanoparticles. The results indicated that adding 0.01 L/L gasoline to a 10-min cavitational cracking process at 80 degrees C and atmospheric pressure can reduce the viscosity of heavy oil by about 20 %. In addition, the presence of iron nanoparticles can increase the rate of hydrogenation and/or cracking reactions in the heavy oil cavitational upgrading process (HCUP) in the presence of a hydrogen donor.