The invention discloses a heavy oil modified viscosity reduction method and application. The method comprises the steps that 1, gas and straight-run distillation light distillate in heavy oil raw materials are removed in a distilling device for oil separation, and distillate with the API degree smaller than 7 is obtained; 2, the distillate in the step 1 and a homogeneous catalyst are mixed, a hydrogenation reaction occurs in a suspended bed reactor, and after the reacting distillate is separated, gas and a liquid phase product are obtained; 3, the liquid phase product in the step 3 is distilled in a fractionating tower to obtain gas, light distillate and hydrogenation tail oil, and the hydrogenation tail oil returns to the suspended bed reactor; 4, the straight-run distillation light distillate in the step 1, one or more of the light distillate in the step 3 and the heavy oil raw materials are blended into synthetic crude oil with the API degree larger than 12. The heavy oil modified viscosity reduction method and application have the advantages that the viscosity can be effectively reduced by slightly modifying heavy oil, the transportation conditions of pipeline transportation, shipping and tank cars are met, the transportation problem of poor oil products is solved, no coke is generated in the modifying process, and modified viscosity reduction oil is good in stability and does not need to be subjected to hydrotreating any more.